Confidential Client

Summary

Lender Advisor

Public For-Profit College

CMA professionals have been retained by the counsel to the lender group to act as its financial advisor. CMA’s role is to review the business, composite score calculations, and 13-week cash forecasts created by the company to assist lenders in assessing its collateral position and the approval of additional cash advances on the revolver during a standstill as the Department of Education determines the Company’s 2012 composite score. CMA is also providing guidance for a possible refinancing of the revolver.

Engagement Highlights

The Confidential Client operates as a post-secondary education company and offers various diploma programs, as well as associate’s, bachelor’s, master’s degrees, and online programs. As of FYE 2012, the Company had 116 schools operating under 3 brand names.
For FYE 2011, the Department of Education calculated the Company’s composite score as being under 1.0, effectively requiring the Company to post a 10% letter of credit and putting the Company in default under the loan documents. The Company fought this decision by arguing that goodwill impairment for the year should be added back to net income in composite score calculations in order to be in compliance.
Currently, the Department of Education is still in the process of calculating the FYE 2012 composite score and the Company has been operating under a standstill on the revolver.
During the engagement, CMA has reviewed in detail the composite score calculations for 2011, 2012, and estimated 2013. CMA has provided input on the probability of and sensitivity on certain metrics (debt, goodwill, expenses, revenue) that would require the Company having to post a letter of credit.
Evaluated 13-week cash forecasts issued monthly, cash variance reports issued weekly, and assessed liquidity needs based upon analysis of this process.

Confidential Client

Summary

Lender Advisor

Engagement Highlights

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