Moody's cuts Education Management view to stable

Moody's Investors Service said it revised Education Management LLC's outlook to stable from positive.

The agency also said it assigned B1 (LGD 3, 45%) ratings to the company's amended/extended $328 million revolving credit facility due 2015 and $759 million senior secured term loan due 2016.

The agency also said it affirmed the B1 (LGD 3, 45%) ratings on the non-extended portions of the $114 million revolving credit facility due 2012 and $353 million senior secured term loan due 2013.

Moody's also affirmed the B1 corporate family rating, B1 probability of default rating, B2 rating on the senior unsecured notes due 2014 and B3 rating on the senior subordinated notes due 2016, along with its SGL-1 speculative grade liquidity rating.

The outlook revision reflects negative industry headwinds due to significant uncertainty over the final form and long-term effects of the Department of Education's pending gainful employment guidelines, generally increased government regulation and industry oversight, and potential challenges complying with ongoing regulatory metrics, Moody's said.

The outlook revision also considers a concern that any potential actions to conform to gainful employment guidelines will likely have negative implications for enrollment and profitability, the agency said.

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