An agreement, which still has to be approved by both regulators and shareholders, calls for the company's lenders, led by the
The proposal, announced Wednesday by
The company's stock price fell during the day to
EDMC has been hit by lawsuits under the False Claims Act and is the subject of investigations by the
By taking an ownership stake, the lenders essentially will be taking over the education provider, which is now 75 percent owned by two investment firms,
The news release issued Wednesday by EDMC said current stockholders would wind up with a total of 4 percent of the company's outstanding common stock and would be able to purchase an additional 5 percent.
The conversion of the debt to stock also would eliminate interest payments on that
The company recorded interest expenses of about
"This is part of the overall transformation of the company," he said. "This is a key element that allows us to strengthen our financial foundation as we continue to focus on making higher education more affordable for students."
"We believe this plan, which will convert a significant portion of our debt into equity and result in a vastly improved capital structure with lower interest expense and extended maturities, is in the best interests of all stakeholders, most importantly our students," president and CEO
"This new capital structure is critical to the future success of EDMC and part of our plan to transform the company," he said.
It is also facing a potential federal court trial next year in a multibillion dollar whistleblower case filed over its recruiting tactics under the False Claims Act. That case was joined by the
(c)2014 the Pittsburgh Post-Gazette
Visit the Pittsburgh Post-Gazette at www.post-gazette.com
Distributed by MCT Information Services