ITT ordered to boost financial cushion to about $124 million from $80 million
http://www.wsj.com/articles/education-department-orders-itt-educational-to-bolster-finances-1465246531
8 replies (most recent on top)
What is ITT-Tech's decision about how to meet ED's demand? Does anyone know yet? ITT-Tech had 10 days from receipt of letter to tell ED what their plan is. Letter was received June 6, so time is up!
From 8-K filed by ESI on June 8:
"On June 6, 2016, the Company received a letter (the “ED Letter”) from the U.S. Department of Education (the “ED”) stating that the ED believes that the ACICS action represents an increased risk to the funds under the federal student financial aid programs ...."
"....The Company is to advise the ED within 10 days of its receipt of the ED Letter whether it will increase the funds held in escrow, or provide a letter of credit."
ESI will have to do some major shuffling--fast. Dozens of schools will need to be consolidated and closed--but teachouts typically take 18 months or more. Consolidations and closings will further infuriate students and workers who will, by word of mouth, continue to downgrade the brand.
I don' t see how ITT can meet this demand. I read that ITT itself had stated in financial reports that it could not guarantee that it could muster another letter of credit.
Shares fell to a new low. http://www.ibj.com/articles/58905-itt-shares-sink-after-feds-order-educator-to-bolster-finances
How are they going to raise 50 million by laying off a few dozen people who were probably only making minimum wage anyway?
By getting rid of the last of any remaining full-time instructors and deans (creating new ghosts for the catalogs), ITT may be able to raise the needed money. But please, keep the commercials going during Jerry Springer shows, if not for the entertainment value. That is money well-spent by any college in the know.
Another high interest loan?
More details:
http://www.nasdaq.com/article/itt-is-told-to-bolster-finances-20160606-01141
Same thing happened before Corinthian Colleges crashed in 2014.