Dec 10, 2016 03:24 AM EST
University Of Phoenix Sale Slammed With Big Demands From The Government
The federal government has brought about several big demands on the $1.1 billion University of Phoenix sale. This comes after there were growing concerns among investors on whether the sale will be pushed through or not.
It was previously reported that investors were "getting jittery" while waiting on the Department of Education to approve the proposed sale of the Apollo Education Group to another group of three private equity firms. The group is the owner of the University of Phoenix.
Back in February, The Apollo Education Group announced the $1.14 billion deal, which will make the nation's largest university private. Last May, it was noted that shareholders have approved the merger agreement.
It is expected that the deal will be closed by the end of this year. Shareholders have agreed to receive $10 cash per share.
According to Bloomberg, the Apollo Education Group won preliminary approval from the government on Wednesday for a group of Wall Street investors to complete the University of Phoenix sale. The conditions of the approval, though, may hinder the final steps of the purchase.
The publication described the conditions of the approval as very "exacting" that it could see investors walking away from the agreement without legal issues. Prospective owners of the institution would need to meet the demands in order for the school to continue receiving student aid funding from the federal government.
One condition required the soon-to-be owners of the University of Phoenix to come up with a $385.6 million letter of credit. Another was that they are not allowed to expand the school's enrollment.
Market Watch noted that, once the University of Phoenix sale has been completed, the owners would also need to submit the schools to "rigorous financial monitoring." Student rosters are also required to be submitted monthly in order for the Department of Education to be able to monitor enrollment.
"If investors were betting that the Education Department would rubber-stamp this deal, they bet wrong," Rohit Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau, told the publication.
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