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On a June evening in 2005, A.C. Bushnell was taking Interstate 90 into upstate New York, daydreaming about front-porch picking, country walking and lake swimming. He was going to visit a few old musician friends and unwind from a hectic work week. But a phone call broke his reverie: His doctor was on the other end, telling Bushnell that the results of a recent blood test looked worrisome. A week later, an MRI revealed that Bushnell had a large tumor in his liver.

“It’s a very strange feeling to think that you might leave the earth so soon,” Bushnell, now 60 and a cancer survivor, muses. “The world looked really beautiful to me. It was very poignant. I asked myself, ‘If I am to die, what is it I want to do while I’m still here?’”

Bushnell’s doctor was able to remove the tumor by performing a liver resection, effectively removing the left lobe of his liver. A year after the phone call, Bushnell was cleared of cancer and past the most grueling part of his recovery. He knew it was time for some changes. He sold his company, General Vitamin Corporation, where he’d been president for the past 15 years. He’d never liked that job very much.

“One of the things I pledged to myself after the surgery was, ‘I’m not going to drag my ass through anything I don’t want to do ever again,’” he remembers. He had no idea what he was going to do other than record a new album.

Bushnell grew up in the heart of Greenwich Village, across the street from Allan Block’s Sandal Shop, a hotbed of the newly burgeoning folk revival movement at the start of the ’60s. Then a shy teenager, Bushnell would hang out with his fiddle in the background of Block’s shop and listen to a young Bob Dylan play folk music. (“He wasn’t as big of a deal then, but we all knew who he was.”) It was the starting point of his enduring love affair with traditional songs.

In May 1972, when Bushnell was 25, he moved to Chapel Hill with his friend Bland Simpson (of The Red Clay Ramblers). He wanted to be closer to the roots of the music he loved. Since 2001, he has made three albums with The Stillhouse Bottom Band. His frenzied, contagious improvisational energy on the fiddle has earned him the local nickname “The Jimi Hendrix of the Fiddle,” but Bushnell had never written songs until he got sick.

“When I first started, I just thought I’d record an old-time music record. That’s what I’ve done and that’s what I’m known for,” he says. “But things began to sort of organically evolve and expand, and the next thing I knew I was writing songs.”

These songs called for a new sound, a different set of musicians, an overall departure from the known. Bushnell went to The Rubber Room, a recording studio in Chapel Hill where Jerry Brown (a guitarist in The Shady Grove Band) engineers. Bushnell and Brown had known each other as fellow musicians for years.

“When A.C. first came in, he had been doing a lot of stuff with folky, old-time bands,” says Brown, the album’s co-producer. “I introduced him to Will McFarlane [former guitarist for Bonnie Raitt] and Robert Sledge [former bassist for Ben Folds Five], people who were more on the electric side of the fence, but also do acoustic stuff and are super players.”

Along with Red Clay Rambler’s Chris Frank on keys and Kevin Brock on drums, the trio formed The Happyjoy Band. The players became an actual band as the sessions progressed: “People usually come in and record records, but … we weren’t just recording a band whose style and sound already existed,” says Brown. “We took a tune that had just been created and then put all these parts together and kept changing it around.”

The result is Dancing on the Water, an exuberant, rangy exploration of death and rebirth, war and peace, love and indifference, sin and redemption, addiction and freedom. Dancing on the Water tackles unlikely subjects like reincarnation, Buddha and spiritual awakening. On two tracks, Bushnell and keyboardist Richard Shulman weave improvised, ethereal violin and keyboard riffs around poems by a self-described mystic poet named Grace. She’s a reclusive spiritual counselor from Mt. Shasta, Calif., and a longtime friend and spiritual mentor for Bushnell. Two other tracks combine old-time music with what Bushnell calls “even older time music.” He’s referring to Kirtan, a type of Hindu chanting where the names of Hindu gods and goddesses are repeated in a communal call-and-response format. To say the least, the tracks that use Kirtan leave a few old-time purists nonplussed.

“Some people really like it,” he says. “Some people in the old-time community are not liking it. There are people in the chanting community who don’t like it, and then there are those that really do.”

Bushnell shrugs as he says this. He went through enough in writing this first batch of songs and turning them into an albumcancer, writing, forming a band, recordingthat the most important expectations are his own: “Because of feeling so close to death, I know now that I’m going to die. I always intellectually knew that someday the body would die, but now I know it viscerally. It’s almost like walking around with death a little bit every day,” Bushnell says. “This actually gives me a huge advantage over people walking around thinking they’re never going to dielike people in their 20s. You play as though this concert may be your last or this day might be your last.”

A.C. Bushnell releases Dancing on the Water at The ArtsCenter Saturday, Nov. 3, at 8:30 p.m. A screening of the DVD Following the Road: Music and Life Lessons with AC Bushnell, directed by Alan Julich of Brightwater Studios, will be shown at 7 p.m. before the music. Bushnell will perform with The Happyjoy Band, The Stillhouse Bottom Band, Cluckin’ A and The Cluckeneers. Special guests include the poet Grace, Hindu chanter Jon Seskevich, Richard Shulman on keyboard and vocalist Andrea Nell. Bland Simpson will emcee the event. Tickets are $15.