Education Management Corporation Completes Debt Restructuring

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.

SOURCE Education Management Corporation

Related Links

http://www.edmc.edu