PITTSBURGH, April 14, 2015 /PRNewswire/ -- Education
Management Corporation (EDMC) today announced that it has completed
a capital restructuring agreement with debt holders after receiving
all necessary regulatory approvals.
EDMC completed the first step of the restructuring on
Jan. 5, 2015, when the company
cancelled in excess of $1.3 billion
of outstanding debt in exchange for the issuance of two senior
secured term loans due July 2, 2020
in the aggregate principle amount of $400
million, mandatorily convertible preferred stock, optionally
convertible preferred stock and warrants for common
stock.
EDMC has now completed the second, and final, step of its
capital restructuring. As part of the second step of the
capital restructuring, the mandatorily convertible preferred stock
was converted into common shares, representing 94.9 percent of
outstanding shares of common stock. After the conversion, there is
no shareholder that holds more than 20 percent of the common stock
of EDMC. Holders of common stock prior to the restructuring
will own 4 percent of the outstanding common stock after conversion
of a second class of non-mandatorily convertible preferred stock,
excluding outstanding warrants and option plans.
Eight members of EDMC's 11-member board of directors resigned in
connection with the completion of the restructuring. EDMC President
& CEO Edward H. West remains on
the board of directors, along with Kermit
J. Cook and Mark A. McEachen,
who were nominated by preferred shareholders earlier this year. In
connection with the closing of the restructuring, the company
anticipates adding John M.
Danielson, Chairman and Managing Director of Chartwell
Hamilton Group LLC and former Chief of Staff at the United States
Department of Education where he served under U.S. Secretary
of Education Rod Paige, and
Johnathan D. Harber, former CEO of
Pearson K12 Technology and founder of Schoolnet, Inc., to the board
of directors, which remains subject to ratification by the
company's shareholders.
"We are pleased to have completed the restructuring in a timely
manner and we look forward to working closely with our new majority
shareholders," said West. "This new capital structure will allow us
to focus on providing an exceptional educational experience to over
100,000 students."
About Education Management Corporation
Education Management Corporation (www.edmc.edu) provides
post-secondary education in North
America through four education systems, The Art Institutes,
Argosy University, Brown Mackie
Colleges, and South University,
totaling 110 locations in 32 U.S. states and Canada. The company offers academic programs
to students through campus-based and online instruction, or through
a combination of both. The company is committed to offering
quality academic programs and strives to improve the learning
experience for its students. Its educational institutions offer
students the opportunity to earn undergraduate and graduate degrees
and certain specialized non-degree diplomas in a broad range of
disciplines, including media arts, health sciences, design,
psychology and behavioral sciences, culinary, business, fashion,
legal, education and information technology.
Cautionary Statement
This press release includes
information that could constitute forward-looking statements with
the meaning of the Private Securities Litigation Reform Act of
1995. These statements typically contain words such as
"anticipates," "believes," "estimates," "expects," "intends" or
similar words indicating that future outcomes are not known with
certainty and are subject to risk factors that could cause these
outcomes to differ significantly from those projected.
Forward-looking statements include, but are not limited to,
statements about the benefits of the restructuring and the
implementation of a management incentive plan in connection with
the restructuring. Any such forward-looking statements
involve risk and uncertainties that could cause actual results to
differ materially from any future results encompassed within the
forward-looking statements. Some of the factors that could
cause actual results to differ materially include, but are not
limited to: the ability to realize the anticipated benefits of the
restructuring; changes in the overall U.S. or global economy;
changes in enrollment or student mix; student retention; the
company's ability to maintain eligibility to participate in Title
IV programs; changes in government spending; increased or
unanticipated legal and regulatory costs; success of cost-cutting
initiatives and growth strategies; changes in accreditation
standards; the implementation of new operating procedures for the
company's fully online programs; government and regulatory changes
including revised interpretations of regulatory requirements that
affect the postsecondary education industry; new programs and
operational changes implemented in response to the "gainful
employment" financial metrics; the impact of the gainful employment
regulation on the company's programmatic offerings to students due
to the inability of the programs to pass the debt to income tests
imposed by the gainful employment regulation; and other factors
discussed in the company's filings with the Securities and Exchange
Commission, including those identified in the "Risk Factors"
section of the company's Annual Report on Form 10-K. Past
results of the company are not necessarily indicative of its future
results. The company does not undertake any obligation to
update any forward-looking statements, except as required by
securities laws.
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SOURCE Education Management Corporation