Education Management opts for stock delisting, reporting suspension

By Caroline Salls

Pittsburgh, Oct. 23 – Education Management Corp. intends to voluntarily delist its common stock from the Nasdaq Global Select Market and to subsequently deregister its common stock under the Securities Exchange Act of 1934, according to a news release.

The company said it and its subsidiaries also plan to suspend their reporting obligations under the Exchange Act, which they are eligible to do because each class of their securities has fewer than 300 stockholders of record.

Education Management said it believes it is in compliance with all of its Nasdaq listing requirements.

However, consistent with other cash management and cost reduction measures that have been implemented by the company, Education Management’s board of directors concluded that the costs of compliance, the demands of management’s time and the company resources required to continue its SEC reporting obligations and maintain its Nasdaq listing were greater than the benefits received from being a listed company.

As previously reported, the company entered into a restructuring support agreement with creditors holding in excess of 94% of its total debt and its principal shareholders in September.

Under the agreement, existing shareholders would retain 4% of the outstanding common stock after giving effect to the conversion of new preferred stock to be issued to creditors and receive warrants to purchase an additional 5% of the common stock.

Education Management said it expects to file a notification of removal from listing and/or registration with the SEC and Nasdaq on Nov. 3. The notification will take effect 10 days after it is filed.

The company said it expects its common stock to be quoted on the Pink Sheets and to continue to trade on the Pink Sheets as long as market makers continue to make a market for the common stock.

Earlier this month, Education Management said it received a standard notice from Nasdaq stating that the company is not in compliance with a listing rule and giving it 60 days to submit a plan to regain compliance.

The notice stemmed from Education Management’s delay in filing its 10-K for the fiscal year ended June 30.

Education Management is a Pittsburgh-based provider of private post-secondary education. It started the offer on Oct. 2.

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