The administrator of a Melbourne private school with debts totalling $19 million has confirmed two parties have already expressed an interest in purchasing the college, including one international buyer.
The collapse of Mowbray College, announced yesterday, has taken both students and the Victorian Government by surprise, after the school said in a statement it had entered voluntary administration after failing to secure new funding.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
“I’ve arrived this morning and already there are a couple of unprompted parties wanting to talk to me about whether they might be able to purchase the colleges,” JP Downey & Co principal Jim Downey told SmartCompany this morning.
“One of those is an international interest,” he says.
Mowbray College chairperson Tracey MacKenzie said in a statement yesterday the school had been unable to get funding to solve its cashflow problems from any banks, the State or Federal Governments, or any other funding source.
“I plead with both the State and Federal Governments to provide assistance to the college and reduce the disruption this difficult decision has on our students’ education,” she said.
“We trust that the board’s decision will improve the chances of recovering from the college’s current financial situation and make way for the Government and bankers to assist to stabilise the educational future of our students.”
Reports indicate the school has experienced some management trouble in the past few years, including numerous leadership changes. Fairfax reported some principals – the school has had five in the last four years – resigned due to conflicts with the board.
The school has received millions in funding from the State and Federal Governments, although it reportedly recorded a loss of $2.4 million in 2009.
It includes three campuses with about 1,000 students, and 200 staff.
Mowbray College was contacted by SmartCompany this morning, but a reply was not available prior to publication.
Jim Downey says while it’s unusual for colleges to collapse, it does occur and much of the time it’s due to issues associated with debt.
“About 18 months ago I had to work on two other schools, and there were similar circumstances there,” he says.
“In the case of those colleges, they didn’t own their own turf, but they were tenants. It’s the same here, where Mowbray isn’t debt free. They’ve had pretty massive debts totalling $19 million, and that takes a lot of servicing.”
Downey says he believes the debt was accumulated over a long period of time.
But there may be hope, as Downey says schools he has worked on previously which fell into administration were also picked up by outside buyers.
“The outcome of those previous cases were that other educational institutions were prepared to take them on. I’ve received interest on this case…so there can possibly be a resolution.”
“That can be the benefit of going into administration, because it becomes a public problem and the solution can be found more easily, sometimes.”
Victorian Education Minister Martin Dixon has said the State Government is working with students to find other education options in the area so VCE students aren’t affected, although Downey has confirmed Mowbray remains open.
The Federal Government cannot offer assistance under the law, which forbids making discretionary payments to private schools.