| Item 1.01. | Entry into a Material Definitive Agreement. |
On March 8, 2019, Career Education Corporation (the “Company”), through a new indirect wholly-owned subsidiary, entered into an agreement to acquire substantially all of the assets of Trident University International (“Trident”). Trident is a regionally accredited university offering online undergraduate, master’s and doctoral programs with a strong focus on graduate programs. Trident is owned by Trident University International, LLC (the “Seller”).
Upon the closing of the acquisition, we intend to combine Trident with American InterContinental University (“AIU”) to enable the combined institution to continue serving existing and future students with a broader range of program offerings and resources. To leverage Trident’s experiences and success, we would continue to offer distinct online programs and curriculum under the “Trident” name. Trident had approximately $46 million in revenue and approximately $9 million in EBITDA during its last fiscal year ended June 30, 2018. On average, Trident had approximately 4,000 students that were registered for courses during the fiscal year ended June 30, 2018. The transaction is expected to close by the end of 2019, subject to necessary regulatory approvals and customary representations, warranties, covenants and closing conditions.
Under the terms of the agreement, we have agreed to pay a cash purchase price in the range of $35 million to $44 million depending on Trident’s actual financial results measured in terms of its revenue and EBITDA during a12-month period prior to closing. We will also reimburse the Seller for certain employee related expenses, the amount of which will be determined at closing but are currently estimated to be up to approximately $1.2 million. In addition, the parties have agreed to a working capital adjustment based on the final closing balance sheet and that $4 million of the purchase price will be set aside in an escrow account to secure indemnification obligations of the Seller after closing. The purchase price is expected to be funded fully using the Company’s available cash balances. The acquisition of Trident is expected to be immediately accretive to the Company’s earnings after closing.
A copy of the Asset Purchase Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Cautionary Statement Regarding Forward-Looking Statements
This current report onForm 8-K contains forward-looking statements, including statements about the expected benefits of the acquisition. These forward-looking statements and the ultimate effect of the acquisition are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including the extent to which we receive all necessary regulatory approvals and are able to successfully transition and integrate Trident’s operations. Further information about these and other risks and uncertainties relating to the Company’s business may be found in the Company’s Annual Report on Form10-K for the year ended December 31, 2018 and its subsequent filings with the Securities and Exchange Commission.Except to the extent required by law, the Company disclaims any obligations to update any forward-looking statements.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
The exhibits to this Current Report on Form8-K are listed in the “Exhibit Index” which is contained herein and incorporated by reference herein.
