Babson College next week will sell $32 million in revenue bonds through the Massachusetts Development Finance Agency to finance construction of the college's Center for Executive Education, which will double in size as a result.
The sale is scheduled for Thursday and is part of what school officials describe as an aggressive capital improvement plan to improve student housing and capitalize on the growing field of corporate education. They expect to frequently offer large deals over the next few years to support the expansion.
Babson, which is located 14 miles from Boston, last came to market in 1998 with a $20 million bond sale, and it has $52.4 million in total outstanding debt.
The college has enjoyed positive operating balances and growing enrollment levels throughout the 1990s. Earlier this week, Moody's Investors Service affirmed the school's strong finances, upgrading the outlook on Babson's underlying rating to positive from stable.
"Executive education is a growing part of higher education, and we have had a pretty good niche in that area for a long time now," said Barry Morrison, director of financial services at Babson. "But there is big demand that we are not meeting."
Lehman Brothers is the underwriter on the negotiated deal, and Palmer & Dodge is the bond counsel. The bonds will carry insurance from the AAA-rated MBIA Insurance Corp. Moody's rated the bonds A3, while Standard & Poor's assigned an A rating. Fitch does not rate the college.
The bond sale will finance 82 new guestrooms, new office space, classrooms, and meeting halls and fund expansion to the dining and kitchen facilities at the Center for Executive Education, an on-campus conference facility designed for corporate-management education. The facility already has 130 deluxe guestrooms.
"Executive education is a natural extension of Babson's curriculum. It helps them diversify away from the reliance on the traditional undergraduate programs," said Rebecca Chahid, an analyst for Standard & Poor's. "Babson is one of the leaders in higher education because of their entrepreneurial focus."
Chahid said that the close proximity to Boston -- and its high population of executives looking to further their education -- puts the college in a very good market position.
Babson has a long bond tradition. The college, located on a 380-acre woodland tract between Wellesley and Needham, was founded in 1919 by Roger W. Babson, who began his foray into the education industry in 1908 by offering a correspondence course on how to sell bonds.
In addition to the executive development programs, Babson has both undergraduate and graduate schools with some 2,700 full-time students.
