Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's assigns Ba3 CFR to Adtalem Global Education Inc.; outlook is stable

26 Mar 2018

New York, March 26, 2018 -- Moody's Investors Service assigned to Adtalem Global Education Inc. a first-time Ba3 Corporate Family Rating (CFR) and B1-PD Probability of Default Rating (PDR). Concurrently, Moody's assigned a Ba3 rating to the proposed first-lien credit facilities, consisting of a $300 million senior secured term loan and $300 million senior secured revolving credit facility (RCF). Moody's assigned an SGL - 1 Speculative Grade Liquidity Rating and rating outlook is stable.

Proceeds from the new credit facilities will be used by the company to repay the outstanding $165 million balance on its current $400 million revolving credit facility and fund cash to the balance sheet for general corporate purposes. We estimate that the company will ultimately use proceeds from the financing towards targeted return accretive acquisitions with a focus in its three verticals: Medical and Healthcare, Professional Education and Technology and Business.

Moody's assigned the following ratings:

Issuer: Adtalem Global Education Inc.

Corporate Family Rating -- Ba3

Probability of Default Rating -- B1-PD

Speculative Grade Liquidity (SGL) Rating: SGL -- 1

$300 Million First-Lien Senior Secured Revolver due 2023 -- Ba3 (LGD3)

$300 Million First-Lien Senior Secured Term Loan due 2025 -- Ba3 (LGD3)

Outlook: Stable

The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as presented to Moody's.

RATINGS RATIONALE

Adtalem's Ba3 CFR reflects the company's solid financial performance at its for-profit medical, veterinary and nursing programs while operating in a challenging higher education regulatory environment. The company has grown over the years via acquisitions in faster growing education segments, providing continuing professional education services for the anti-money laundering and accounting industries and operating various higher education institutions in Brazil. These investments contribute a relatively small proportion of revenue and operating income towards the company's results but we expect them to increase their contribution over time. On December 5, 2017, Adtalem announced its sale of DeVry University and Keller Graduate School of Management to Cogswell Education LLC for de minimus consideration. The sale includes an earn-out for Adtalem over a 10-year period based on DeVry University's future performance, with an agreement that Adtalem will provide DeVry University with minimum working capital balance adjusted for student enrollment. Moody's rating incorporates an expectation that the sale of DeVry University will close in early fiscal 2019, with the remaining assets constituting the credit entity.

Adtalem's medical and healthcare segment addresses resource shortages in the United States for medical profession services, both for doctors and nurses. This segment contributes approximately 60% of revenue and nearly 80% of total operating income pro-forma for disposition of DeVry University. The company's Chamberlain University has grown its nursing student enrollments consistently over the past several years, increasing total students from nearly 22,000 to over 29,000 over the past two years while retaining healthy operating margins. The company's Caribbean based medical schools admit students whose graduate residency placements are slightly lower than those of traditional U.S. medical schools. These schools have experienced recent matriculation declines due to strong competition from newly Title IV eligible schools and increased supply of Osteopathic programs of study. Adtalem's management has revised the marketing of these institutions to its prospective students, and we expect that enrollment volumes will stabilize over the next 12-18 months. The company's veterinary school is a weaker institution in the medical and healthcare portfolio, and is currently considered in 'zone' under Gainful Employment (GE) regulation due to higher rate of debt payments relative to earnings. Programs that receive four consecutive years of zone or fail rates become ineligible for federal student aid. Adtalem submitted a GE appeal in February 2018 to prevent possible loss of Title IV funding as early as fiscal 2020. In addition, the U.S. Department of Education has initiated a rulemaking process to replace the current GE regulations.

We expect Adtalem to continue generating strong positive cash flow over the next 12-18 months as it invests in growing its Chamberlain University and improving its healthcare segment facilities. We expect Adtalem to use at least a portion of its financing proceeds towards targeted acquisitions in healthcare or professional education segments. The company's operating model is highly efficient, with rolling admissions to many of its programs. This provides for higher utilization of its human and physical assets, increasing operating margins, while providing flexibility to prospective students. Pro-forma for the proposed financing, leverage is 2.2x total debt to EBITDA (incorporating Moody's standard adjustments) and we expect that enrollment stabilization and growth will provide some incremental margin improvement. We expect the company to generate $120 - $150 million in run-rate annual free cash flow over the next 12-18 months. We expect that approximately $100 million of annual cash flow will be used towards share buybacks.

The Ba3 rating and LGD-3 on the 1st lien senior secured term loan and revolving credit facility is in line with the Corporate Family Rating as this debt comprises the vast majority of funded debt. There are no financial covenants on the term loan. The revolving credit facility will have maintenance covenants, including minimum fixed charge coverage of 2x and maximum leverage of 2.5x, with a step-down after June 2021 to 2.25x. The company will also be subject to education industry specific covenants, such as minimum composite financial responsibility ratio of 1.5x, maximum cohort default rates and maximum institutional student loans outstanding. The term sheet provides for 50% Excess Cash Flow Sweep when Total Leverage is greater than 1.75x starting in the FYE June 2019. We expect final documentation to provide that a breach of financial covenants under the Revolving Facility will not result in a default under the term loan facility unless revolver lenders accelerate the amounts due and/or terminate the commitments as a result of failure to comply with financial covenants.

The stable rating outlook reflects Moody's view that the company will maintain its strong position within the medical and healthcare segment, while addressing the gainful employment regulatory issues at its veterinary program. We anticipate stronger organic growth in the professional education segment, with further geographic expansion of Chamberlain nursing programs. The stable outlook incorporates our expectation of educational asset acquisitions over the next 12-18 months. We expect the Adtalem to continue generating strong positive free cash flow, with minimal de-levering over the forecast horizon.

Upgrade is unlikely due to continued regulatory risk and intended acquisition driven growth strategy. However, strong organic growth in enrollments matched by reduction in leverage to 1.5x or lower may increase the likelihood of an upgrade. Liquidity would also need to remain very good.

Ratings could be downgraded if Adtalem experiences sustained enrollment declines at the healthcare segment or if its operating performance declines materially, resulting in debt-to-EBITDA Moody's Adjusted leverage increasing and sustained above 2.75x. A downgrade may also be likely if unanticipated regulatory challenges arise in any material operating institution resulting in sizeable litigation expenses, ineligibility for Title IV funding or removal of accreditation. Meaningful deterioration in liquidity position or substantial challenges of any potential acquired asset integration may also result in a downgrade.

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Adtalem Global Education Inc. ("ATGE") is a global provider of educational services with a focus on Medical & Healthcare, Professional Education, and Technology & Business. The company operates eight educational institutions across the US, Brazil, and Caribbean. Headquartered in Chicago, Illinois, Adtalem generated $1.3 billion in revenues for the twelve months ending on December 31, 2017 and pro-forma for the sale of DeVry University.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Alina Khavulya
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

John Diaz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com