ITT shares plunge after property sale collapses
Aug 4 (Reuters) - ITT Educational Services Inc's shares fell more than 30 percent to their lowest in 14 years after the for-profit college operator said a deal to sell some of the properties fell through.
ITT said the potential buyer, College Portfolio Buyer LLC, dropped out after ITT refused to extend a due diligence period.
CPB had sought an extension to the due diligence period to Sept. 15 from July 31 under its sale and leaseback pact, ITT said late on Friday. (bit.ly/1qUhC0A)
As part of the deal with CPB, ITT was prevented from entering into financial agreements with others during the due diligence period.
"While another agreement could ultimately be established, we believe this termination should be viewed negatively in lieu of the company's already limited capital flexibility and recently increased oversight from the (Department of Education)," Compass Point LLC analyst Michael Tarkan said in a note to clients.
ITT said in May the sale of its 24 properties could fetch about $119.1 million when it announced the deal.
The company also said on Friday it had amended its credit agreement with lenders to get waivers on certain debt covenants and defaults.
ITT offers technology-oriented undergraduate and graduate degree programs through its ITT Technical Institutes and Daniel Webster College.
For-profit colleges have come under fire in recent years for their poor track record in helping students find employment.
The U.S. Consumer Financial Protection Bureau sued ITT in February, accusing it of exploiting students and pushing them into high-cost private loans that left them with huge debts.
ITT shares were down 32 percent at $9.78 by midday on the New York Stock Exchange. Up to Friday's close, the stock had fallen 44 percent since the deal was announced in May. The stock traded as high as $133 in 2009. (Reporting by Sweta Singh and Mridhula Raghavan in Bangalore; Editing by Saumyadeb Chakrabarty)