ITT Educational Services, Inc. (NYSE:ESI) announced today that the deal it had struck to sell and lease back some real estate was off. Not including today’s decline, the for-profit college operator had already plunged by 57% this year.
ITT Education Services loses deal
In a filing with the Securities and Exchange Commission today, ITT Educational revealed that College Portfolio Buyer LLC had canceled its planned purchase of 24 pieces of real estate. The firm canceled the deal on July 29. According to The Wall Street Journal, the buyer wanted to extend the due diligence period through Sept. 15. ITT decided that it would be better to enter negotiations with other potential buyers. If ITT had completed that sale, it would have brought in up to $119.1 million, according to a filing dated May 8.
Bloomberg reports that ITT Educational Services is the subject of a number of investigations. The company said it faces probes from the SEC, the Consumer Financial Protection Bureau and state attorneys general. Officials are looking into ITT’s accounting, loan and marketing practices.
ITT Educational deals with bad news
The college operator said it might have to post a letter of credit in order to keep qualifying to receive federal student loans and grants. The Department of Education will have to decide that. ITT said last week that it was setting up financing for a letter of credit for up to $98 million, compared to the previous amount of $80 million. Analysts at Merrill Lynch cut their price target for ITT Educational Services from $16 to $19 per share based on concerns about the possibility that officials will increase their monitoring on ITT’s cash.
Bloomberg asked an ITT spokesperson about College Portfolio Buyer. She said it was just a “generic” name they had used in the SEC filing to refer to an undisclosed possible buyer. She added that they had been looking into the real estate sale upon reviewing the company’s holdings.