Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events    

On November 3, 2020, the Company completed the previously announced acquisition of the Australia and New Zealand operations of Laureate. Pursuant to the Purchase Agreement, aggregate consideration paid by the Company was approximately $662.0 million in cash, which reflected the original agreed upon purchase price of $642.7 million, plus a $19.3 million adjustment reflecting an estimated $16.0 million of net cash at close, and an estimated $3.3 million related to higher working capital. These estimated adjustments will be subject to a final true-up of net cash and net working capital, based on the actual closing accounts to be agreed upon no more than 60 days following close. The Company funded the aggregate consideration paid in the transaction using cash on hand and borrowings under the Company's credit facility.

In addition, on November 3, 2020, the Company entered into a Third Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement and Amendment to Other Loan Documents (the “Amendment”). The Amendment amends the Company’s existing amended credit agreement and the Supplement Agreement, dated August 10, 2020, (collectively the “Credit Agreement”). The Credit Agreement, provided, among other things, for a $350 million senior secured revolving credit facility (the “Revolving Credit Facility”) with a maturity date of August 1, 2023.

The Amendment, among other things, (i) extends the maturity date of the Revolving Credit Facility from August 1, 2023 to November 3, 2025, (ii) provides the Company with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in the future in an aggregate amount of up to the sum of (x) the greater of (A) $300 million and (B) 100% of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company's leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00, (iii) provides for a subfacility for borrowings in certain foreign currencies in an amount equal to the U.S. dollar equivalent of $150 million, and (iv) amends certain negative covenants and events of default. In addition, the Credit Agreement, as amended by the Amendment, requires that the Company satisfy certain financial maintenance covenants, including:

•A leverage ratio of not greater than 2.00:1.00. Leverage ratio is defined as the ratio of total debt (net of unrestricted cash in an amount not to exceed $150 million) to trailing four-quarter EBITDA.

•A coverage ratio of not less than 1.75:1.00. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense.

•A U.S. Department of Education Financial Responsibility Composite Score of not less than 1.0 for any fiscal year and not less than 1.5 for any two consecutive fiscal years.

In addition, the lenders party to the Credit Agreement consented to the consummation of the Company’s acquisition of the Australia and New Zealand operations of Laureate.

Except as amended by the Amendment, the remaining terms of the Credit Agreement remain in full force and effect.

These events had no impact on the unaudited condensed consolidated financial statements as of September 30, 2020.