From 8-K filing
Cerberus has moved on the company bank accounts.
Company plans to cease all operations on Sep 16.
From 8-K
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement.
On September 8, 2016, ITT Educational Services, Inc. (the “Company”) received a letter (the “Letter”) from the Company’s senior secured lender
referencing that certain Financing Agreement, dated as of December 4, 2014 (as amended, the “Financing Agreement”), by and among the Company, the
subsidiary guarantors party thereto, the collateral agent and administrative agent, and the lenders party thereto. The Letter stated that as of the date thereof,
an Event of Default (as defined in the Financing Agreement”) has occurred and is continuing under Section 9.01(s) of the Financing Agreement as a result of
the Department of Education’s (“ED”) requirement, as set forth in its August 25, 2016 letter to the Company, to increase the size of the Company’s surety to
the ED by approximately $152.9 million.
The Letter further stated that, as a result of the occurrence and continuation of the Event of Default, effective immediately, the Company’s senior
secured lender (a) accelerates the Term Loan (as defined in the Financing Agreement) and requires that the Company immediately repay the entire
outstanding amount of the Term Loan of approximately $34.5 million, together with all fees, costs and expenses and all other obligations payable under the
Financing Agreement and the other related documents and (b) declares that all such amounts are immediately due and payable without presentment, demand,
protest or further notice of any kind. In addition, until the amounts are paid in full, all loans and all fees, indemnities and other obligations of the Company
under the Financing Agreement shall bear interest at the Post-Default Rate (as defined in the Financing Agreement).
On September 8, 2016, the Company’s senior secured lender, in accordance with its rights under certain Deposit Account Control Agreements and
Blocked Account Control Agreements executed as part of the Financing Agreement, provided notice to the Company’s financial institutions that the lender
was exercising its control over the Company’s bank accounts and instructed the financial institutions to transfer all of the Company’s cash balances to
accounts controlled by the lender.
The cumulative effects of the events over the last several weeks have led the Company to plan to cease all operations as of September 16, 2016.
Item 8.01 Other Events.
On September 12, 2016, the Company and Southern New Hampshire University (“SNHU”) entered into a Teach-Out and Program Articulation
Agreement (the “DWC Agreement”) to help Daniel Webster College students continue their degree programs. As part of the agreement, SNHU will provide
the faculty, facilities and student support necessary to deliver all Daniel Webster College academic programs through the 2016-2017 academic year. The
DWC Agreement has been approved by the New England Association of Schools and Colleges and the New Hampshire Commission of Higher Education, and will be reviewed by the U.S. Department of Education.