Boston, MA 08/28/2014 (wallstreetpr) – According to a report in Reuters, Education Management Corp (NASDAQ:EDMC) said that it had agreed on a restructuring that would lower its debt by almost $1.1 billion. Hence, such reorganization will be providential for the company’s profile. Also, the restructuring would look for a waiver of all financial contracts through June.
The exchange
According to a report published in Business week, the for-profit college operator settled for a prospective deal with creditors that would, in fact, relinquish control to them in return for lowering debt. The stocks of the company that are backed by the Goldman Sachs and Providence Equity Partners plummeted around 23%.
The largest providers of post-secondary education in North America clinched the deal with holders of over 80% of its unsecured as well as secured financial indebtedness. The company’s BOD has given consent to the restructuring.
The CEO’s statement
As per the CEO and president of Education Management Corp (NASDAQ:EDMC), Edward H. West’s comment in a report by Providence Journal, the company “believes” this plan to be potential to transform an important portion of its debt into equity. Also, the restructuring is believed to lead to a greatly improved capital setup with extended maturities, as well as lower interest expenditures. It would add value to the shareholders and also the company’s students, added the CEO. Most importantly, this new capital structure is part of the company’s plan to alter itself, and intrinsic to the potential success of the company.
The Education Management Corp (NASDAQ:EDMC), besides lowering debt through planned restructuring, would also exchange almost $1.5 billion of outstanding debt as of June 30, 2014 for $400 million new debt worth. Also, it will issue preferred equity convertible into ordinary stocks and warrants.
Solicitation of consents
Also, going by the report in Yahoo! Finance, Education Management Finance Corp. and Education Management LLC, the two wholly-owned subsidiaries of the parent company, on August 27, declared that they have initiated a solicitation of consents to reform the agreement administering their Senior Cash Pay/PIK Notes Due 2018.
