FAYETTEVILLE, Ark. (AP) – An Arkansas university board has approved a loan of up to $19.1 million that will allow its athletic department to pay off debt due this year and next year on bonds issued for its facilities.
The University of Arkansas System board of trustees approved the loan agreement Tuesday, which UA officials told the board would be a way to refinance annual debt payments and is part of plan to reduce costs in wake of the pandemic.
Hunter Yurachek, athletic director at the Fayetteville campus, told the board the department expects to see “a minimum” of a $20 million drop in revenue. A total of $124.6 million in revenue was projected for the year, the Arkansas Democrat-Gazette reported.
“Additional shortfalls and revenues can be anticipated if additional events are canceled or further adjustments have to be made to our venue capacity levels,” Yurachek said.
The loan from Regions Bank will be paid off “interest only” in the first three years and the principal will be paid over five years, said Clayton Hamilton, the top finance officer for the department.
The loan is to have a maximum interest rate of 2% annually, according to the resolution approved by the board without any opposition.
Hamilton told the board that about $19 million will be used from the loan to cover debt payments.
The department’s debt as of June 30 totals $163.4 million, a university spokesman said.
Hamilton said the loan “will not increase the total debt for the athletic department or extend the number of years for outstanding debt beyond what is currently 17 years.”
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