Opinion ID: 203099
Heading Depth: 3
Heading Rank: 3

Heading: Equity Contribution

Text: The amended complaint alleges that the Official Statement also skewed the school's future financial health by misrepresenting Bradford's intentions regarding a planned equity contribution to the construction and renovation project. The Statement, under the heading of Estimated Sources and Uses of Funds, said that a $1 million contribution of the college's own funds would be used for the construction and renovation project. The amended complaint alleges that at a February 5, 1998 meeting of two committees of the Board of Trustees, those committees determined that the bond issue would not cover the entire cost of the project and resolved to recommend to the full Board that [t]he College will have to review the project and attempt to reduce the final two phases to correspond with the bond financing or the College will have to include an equity contribution to fund a portion of the construction. It was agreed that the bond financing would proceed as recommended with Advest and that the College would make every effort to reduce its construction costs or make an equity contribution at the end in the final phase of the project. (Emphases added in amended complaint.) The plaintiffs interpret this as revealing the Bradford defendants' intention not to contribute any funds to the project, but rather to cut corners on the project in an effort to bring project costs down to the level of the bond financing. The Official Statement was allegedly misleading because it failed to disclose the contingent and delayed nature of the College's putative `equity' contribution. Even accepting the allegations as true, and adopting the plaintiffs' preferred inference that the committees' recommendation was implemented by the full Board prior to the bond offering, the allegations simply do not establish any misrepresentation. The Official Statement does not speak in any way to the timing of Bradford's expected contribution. By like token, the committees' statement from the February 5, 1998 meeting does not at all foreclose the college from making an equity contribution; in fact, it clearly states an intention that the college would contribute should the cost of completing the project so require.