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MPH receives loan for debenture repayment
September 10, 2002
Winnipeg, Man. and Newton, Kan. (MC Canada and MC USA)Mennonite Publishing House (MPH) has received a one-year repayable loan of $2.3 million (all funds listed in US dollars) from a supportive Mennonite-related institution that wishes to help the struggling publisher retire all of its outstanding debentures (loans owed to individuals and churches). This action, while not changing the total amount of MPH debt, will greatly simplify the financial structure of MPH and bring it into full compliance with known regulatory requirements.
Members of the Joint Executive Committee for Mennonite Church Canada and Mennonite Church USA, however, are quick to point out that while the loan buys some time, it does not reduce the need or urgency for current fundraising efforts in support of MPH.
The welcome turn of events is further bolstered by figures that show MPH operations have improved significantly since the start of its current fiscal year on February 1. Although the current year operations to date are at breakeven, this reflects a dramatic reversal in the trend of the publishers bottom line as a consequence of ongoing cost-cutting and other restructuring efforts. Last fiscal year MPH lost $793,079 on operations.
The new $2.3 million loan assumes that Mennonite Church USA and Canada follow through on a recently launched $5 million fund-raising effort to retire all outstanding MPH debts. Constituency support has already resulted in an outpouring of $300,000 toward meeting the various financial obligations of MPH.
Earlier this year, the denominations made loans to MPH of $975,000 (MC Canada) and $1.5 million (MC USA) to allow MPH to pay off past-due vendor debts, close a costly bank line of credit, and restore its operating balances. The denominations have also signed joint guaranty letters for the new loan. Guaranteeing the loan does not reflect any new debtit simply consolidates the debt and relieves some of the pressures of potential legal implications related to the outstanding debentures. MMA Trust Company of Goshen, Indiana, has agreed to serve as an intermediary to channel the loan to MPH
The $2.3 million loan is from a supportive and trust-worthy Mennonite-related organization that does not wish to be publicly identified or recognized for this loan, said MPH board chair Ron Sawatsky. The lender's motivation is simply to support the spirit of mutual aid within the church, he noted.
"This debenture loan is a unique gift. It frees MPH of the legal and regulatory pressures of the debentures. The undisclosed lender is taking a major risk and yet will realize no profit as a consequence of the loan. In my opinion it is a very fine example of how the church should act when part of the church is hurting. It is being done for the benefit of Gods work. Now the challenge comes to the church. Will the membership respond generously to this opportunity to support the MPH recovery? ", said Sawatsky.
The $2.3 million loan will allow full repayment of all of MPHs outstanding debenture notes to occur within the next month. MPH is currently mailing notification of its intent to call and redeem the notes within 30 days.
"For many years, MPH has been able to use these covenantal loans from its supportive constituency to cover its shortage of operating funds," said Jim Harder, interim MPH secretary/treasurer and member of the JEC. "Even though MPH will no longer be continuing that practice, MPH remains deeply thankful to the many individuals and churches who over several decades have entrusted their money to advance the ministry of denominational publishing."
The $2.3 million loan that facilitated the immediate repayment of the debenture notes must itself be retired within the next year. Toward that goal, congregations are set to receive information packets from the MPH Debt Reduction Committee in September. Planned by committee chair Lee Delp (Lansdale, PA), Wilmer Martin (Waterloo, Ontario) and Aaron Groff (Lancaster, PA), the campaign seeks to raise $5 million to retire all outstanding MPH debts in a two-phase campaign between now and June 2003.
The material appeals for the support of the publisher with its 100 year history of providing uniquely Anabaptist based books and resources. Using a "barn raising" metaphor, the material states that "Thousands of Mennonites and others have experienced spiritual growth through resources like VBS and Sunday school curriculum, Hymnal: A Worship Book, The Upside-Down Kingdom, Believers Church Bible Commentary Series, and the More with Less Cookbook."
Ervin Stutzman, MC USA moderator said, "Over the past few months, a number of people have been asking me when they're going to have the opportunity to give to MPH. Well, now's the time. I'd love to see the church respond generously to this barn raising challenge."
The material urges Mennonites to look ahead: "The future of a Mennonite church with strong Anabaptist resources means a strong and growing Anabaptist faith perspective that we can share with the world."
Henry Krause, moderator of Mennonite Church Canada concluded, "I am very pleased with this next step in financial situation at MPH and thankful for the ability we now have to pay off the debentures. Although we still have the loan to repay, the ability for our churches in Canada and the United States to continue the work of publishing and providing materials for our churches is greatly enhanced by this refinancing."