Dive Brief:
- Financially troubled Education Management Corp. (EDMC) says it has worked out an agreement with more than 80% of its creditors that will allow the for-profit educator to keep its campuses and programs operating.
- EDMC will exchange debt for preferred equity in the company, lowering its total debt to about $400 million from $1.5 billion while lowering its interest rates and extending maturities for the remaining debt.
- The Pittsburgh company said that current shareholders will be left with 4% of its outstanding stock, down from 100%, with the potential to buy another 5%.
Dive Insight:
The New York Post had reported in July that the company was scrambling to get its finances in order before federal regulators were scheduled to look at EDMC's books. The restructuring announced Wednesday is pending a shareholder vote, which will happen sometime next year. The company said the move “will support continued strategic changes and transformation” at EDMC. EDMC has 110 locations in the U.S. and Canada, with about 119,500 students as of April.