Education Management lines up $150 million letter-of-credit facility

By Susanna Moon

Chicago, Dec. 1 - Education Management LLC, a subsidiary of Education Management Corp., closed a $150 million letter-of-credit facility with Bank of America, NA as administrative agent, collateral agent, issuing bank and lender, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch was the arranger and bookrunner.

Under the agreement, Bank of America will issue on behalf of the borrower up to $150 million of letters of credit to the U.S. Department of Education.

The facility matures on the earlier of Nov. 30, 2013 and the date of any early termination of the revolving commitments otherwise scheduled to mature in 2015 under the borrower's amended credit agreement with BNP Paribas as administrative and collateral agent, according to the filing.

Letters of credit issued under the facility must expire no later than the earlier of five business days prior to maturity or the date that is 17 months from the date of issuance.

The loans will be secured by a lien on cash deposited by the borrower in cash collateral accounts in an amount equal to 105% of the total amount of all letters of credit outstanding under the facility. Education Management Holdings LLC, another subsidiary of Education Management Corp., agreed to guarantee the borrower's payment of its obligations under the facility, the filing noted.

The commitment fee is 15 basis points, and the letter-of-credit fee is 75 bps.

Covenants limit the ability of the borrower to merge, consolidate, liquidate or dispose of its assets and also limit the borrower's ability to incur additional liens on the collateral.

Events of default include the borrower's failure to pay or reimburse amounts drawn under any letter of credit or to perform or observe other covenants or agreements under the facility, insolvency events and the failure by the borrower, Education Management Holdings or their respective subsidiaries to make any payment beyond any grace period on other debt in excess of $50 million.

Education Management is a Pittsburgh-based provider of post-secondary education.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.