Aug 27 Education Management Corp said
it would undertake a financial restructuring that would reduce
its debt by about $1.1 billion and would seek a waiver of all
financial covenants through June under an amendment to its
The for-profit education company's shares rose 10 percent to
$1.69 in early trading.
The company said it will exchange about $1.5 billion of
outstanding debt as of June 30 for $400 million of new debt,
preferred equity convertible into common shares and warrants.
Education Management said its existing shareholders will
retain 4 percent of the outstanding stock after the conversion
of the preferred shares and will receive warrants to buy an
additional 5 percent.
The company, among the largest providers of post-secondary
education in North America, is the latest U.S. for-profit
education provider to restructure its debt.
These companies have been rocked by falling enrollments and
increased regulatory scrutiny resulting from their poor record
of creating employable graduates.
Education Management said 80 percent of its debt holders
support the restructuring so far.
Up to Tuesday's close, the stock had lost over 80 percent of
its value so far this year.
(Reporting by Sweta Singh in Bangalore; Editing by Savio