Business Context and Reporting Period
Company: Lincoln Educational Services Corp
Filing Type: Form 8-K (Current Report)
Date of Report: April 12, 2016
Event: Entry into a Material Definitive Agreement (Credit Amendment) with Sterling National Bank.
Key Financial Metrics
This filing reports on a specific financing arrangement rather than periodic financial performance. Consequently, revenue, profit, cash flow, margins, and overall liquidity metrics are not provided in this document.
- Facility Type: Letter of Credit Facility
- Maximum Availability: $9,500,000
- Collateral Requirement: 100% margin against available funds in a cash collateral account
- Fee Structure: 1.75% on the daily amount available to be drawn
- Payment Terms: Quarterly installments in arrears
- Maturity Date: April 1, 2017
Material Changes
The Company replaced an existing letter of credit facility with a prior lender. The new agreement with Sterling National Bank establishes a maximum availability of $9,500,000, secured by a cash collateral account maintained by the Borrowers.
Outlook, Risks, and Contingencies
Management Commentary: The filing states the agreement contains representations, warranties, affirmative and negative covenants, and events of default customary for facilities of this type. The full text of the Credit Agreement is filed as Exhibit 10.1.
Risks: The facility is subject to standard events of default and covenants. The requirement for 100% cash collateral implies the Company must maintain significant liquid assets to utilize the facility.
Investor Verification Checklist
- Verify the impact of the 100% cash collateral requirement on the Company's available liquidity.
- Review Exhibit 10.1 (Credit Agreement) for specific affirmative and negative covenants that may restrict operations.
- Confirm the status of the prior lender facility being replaced.
- Assess the cost of the 1.75% letter of credit fee relative to the Company's overall cost of capital.