Department of Education Requires Letter of Credit for Apollo Education Privatization Deal

The U.S. Department of Education announced late Wednesday that in order for Apollo Education Group Inc. to be taken private by a consortium led by private-equity firm Apollo Global Management LLC and still be eligible for Title IV federal student-aid funds, the acquiring group would need to post a letter of credit topping $385 million.

The group also would have to provide the federal government with detailed financial statements, monthly student rosters and other information.

Apollo Education, which operates the University of Phoenix chain of for-profit colleges and a number of international programs, agreed in February to be taken private for about $1.1 billion, or $9.50 a share, by Apollo Global, Vistria Group and Najafi Cos. The deal was approved by shareholders in May after the price was boosted to $1.14 billion, or $10 a share.

An Apollo Education spokesman said, "Apollo Education Group can confirm that we have received the letter and are evaluating it."

Apollo Global wasn't immediately available to comment.

The deal was contingent on, among other things, "the absence of certain conditions or restrictions" in the Education Department's response to Apollo's proposed deal, and a green light from Phoenix's accreditor, according to securities filings, though those conditions and restrictions weren't spelled out. The accrediting group hasn't yet issued a decision on the proposed deal, having said that it would wait until after the Education Department came out with its verdict.

The deal was initially expected to close by August, and most recently was projected to be completed by February.

Write to Melissa Korn at [e-mail]

(END) Dow Jones Newswires

December 07, 2016 19:05 ET (00:05 GMT)

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