Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, January 9, 1993 TAG: 9301090246
SECTION: VIRGINIA PAGE: A3 EDITION: METRO
SOURCE: Associated Press
DATELINE: LYNCHBURG LENGTH: Medium
RTC SELLS LOAN NOTE TO FALWELL TV COMPANY
The Rev. Jerry Falwell has protected his church from government foreclosure by using the ministry's television production company to take over the debt at a $4 million discount.Ministry attorney Robert Glenn said ministry officials were concerned that the Resolution Trust Corp. would try to foreclose on Thomas Road Baptist Church.
"We thought it was better to have it [the debt] in friendly rather than unfriendly hands," Glenn said Thursday.
Falwell's Liberty University was protected from foreclosure last month when a Bedford County circuit judge approved the ministry's agreement with bondholders.
RTC, the government agency created to sell off the assets of failed savings-and-loans, sold the note it held to Liberty Broadcasting Network last week. The church and its private school, Lynchburg Christian Academy, located behind the church, had been used as collateral for that loan.
Church attorney Jerry Falwell Jr. would not discuss the purchase price. The RTC refused to release information about the sale.
But an official on the church's board of deacons told The News & Advance of Lynchburg that the network paid the RTC $2.5 million for the note, which had a face value of $6.5 million. The official spoke on the condition his name not be used.
The RTC, which is trying to dispose of its holdings by the end of the year and shut down, regularly sells assets at far less than their face value when buyers are scarce.
The church mortgage has been turned over to Peoples Bank of Danville, which financed the loan the network used to buy the note. The mortgage will be used as collateral on other ministry debts.
The RTC acquired the note after the government seized the California-based Lincoln Savings and Loan, which put up $8.5 million for a loan to Old-Time Gospel Hour in 1989. Lincoln was the largest and most costly of the S&Ls that collapsed during the '80s.
The ministry paid about $1 million on the loan, Glenn said, before defaulting on its $24,000-a-week payments. With interest, the debt on the $8.5 million loan had climbed to $11.6 million by the end of 1992.
The arrangement removes the church mortgage from government control and reduces the Falwell ministries' debt to the RTC to about $5 million. As part of the restructuring worked out with the ministries, the RTC split the $11.6 million debt into three parts, one for $6.5 million that included the church and academy as collateral.
Old-Time still is liable to the RTC for the rest of the debt, totaling $5.1 million and secured by land in Campbell County and Lynchburg.