Bond loses battle for land

January 9, 1998

AFTER a near ten-year fight for survival, the future of Australia's first private university is again uncertain.

Bond University was established on the Queensland coast in 1989 by now-bankrupt and gaoled businessman Alan Bond.

Last month it faced a new crisis when it lost a court action for control of its campus. Bond could now be evicted or lose a takeover fight mounted by the University of Queensland.

Set up with more than Aus$300 million of Japanese investment money, Bond has had to contend with student fee income only a fraction of first predictions. Within three years the university was also confronted with the collapse of the Bond empire and later that of his Japanese partner, EIE International.

In 1996, the University of Queensland made a Aus$110 million (Pounds 43 million) takeover bid that was accepted by EIE's receivers, the Long Term Credit Bank of Japan. The university offered to allow Bond to continue to operate on-site and pay rent.

The Bond council rejected the offer and went to the Queensland Supreme Court to prevent the sale. The council claimed it had a 99-year lease over the 200-acre campus, its 50-acre research park and a further 600 acres of undeveloped land that could be used to build 3,000 houses.

The court last month rejected the claims and ruled that Bond University was merely a tenant and would have to start paying rent to the campus mortgagee as well as repaying its outstanding debt to the bank plus back rent and interest totalling almost Aus$8 million. Apart from costs awarded against it, Bond faces debts of more than Aus$100 million, rent of Aus$3.5 million a year and all repairs and maintenance costs.

The court ordered the university to pay off what it owed and gave three year's notice to vacate the site, subject to the payment of rent in advance. The notice to quit reduces to one month if the university fails to pay the rent, or to meet repairs and maintenance costs.

From the beginning Bond has battled to overcome its financial difficulties and has also endured a succession of academic and management upheavals that have seen eight chief executives come and go in as many years.

Two years ago Harry Messel, its former executive chancellor, faced an almost unanimous vote of no-confidence by his staff. This led to the appointment of an acting chief executive and an inquiry that revealed administrative problems and possible breaches of the law.

By late 1995, enrolment of 1,200 was the lowest in three years; the decline was reflected in a marked drop in student fee income - despite fee increases and savage cuts in scholarship allocations.

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