While most for-profit education providers are facing difficulties with funding in the wake of enrollment struggles and federal regulation, the Capella Education Company has announced that it has entered into a restated and amended credit agreement that will be revolving and amount to $100 million.
Capella provides post-secondary education online and is a subsidiary of Capella University. Under the newly amended credit agreement, the borrowing capacity will remain at $100 million with an increase option for $50 million. The term of the agreement is for five years and will end on 18th of December in 2020.
The new plan is set to replace a previous agreement of five years, which will expire on the 30th of September, in 2016, according to Business Wire.
According to Capella’s Senior Vice President and Chief Financial Officer Steve Polacek:
“This credit facility provides Capella with additional financial flexibility to support long-term sustainable growth and flexibility to consider future strategic growth initiatives.”
This may have an impact on stock prices as well. A staff writer for The Stock Review shares:
“Brokerage firms on Wall Street have been given an average recommendation of 2.5 for Capella Education Company (NASDAQ:CPLA). This is the mean buy/sell rating based on 4 sell-side analysts providing coverage on the stock. This number is calculated by Zacks Research and is based on a simple 1 to 5 scale, where 1 represents a Strong Buy and 5 a Strong Sell. An average broker rating, or ABR, that is under 2 typically indicates a Buy recommendation. A company with an ABR of 4 or 5 represents a sell recommendation.”
Potential investors are also advised to take note of analyst price projections and target projections as well as estimates for future earnings. The consensus for Capella Education Company is a fifty-two-week price target of $60 per share. While the most conservative estimates show the stocks reaching $50, some show shares going as high as $77 dollars.
The amended agreement for Capella University is provided by Bank of America, which will be the administrative agent as well as the lender. Other lenders will include Bank of the West, PNC Bank National Association, and Associated Bank National Association.
Capella Education Company was founded in 1991 and has become a leader in online education. It is now a regionally accredited university with over 37,000 students. They offer a range of programs including doctoral, bachelor’s, and master’s programs in such fields as education, technology, business management, behavioral health and human services, and public service leadership.
Roughly 75% of Capella students enroll in doctoral or master’s programs. Over 1,600 online courses are offered by the school, with 43 academic programs and 148 specializations. Students attend class on their own schedule and can participate in live classes with teachers and other students. Learning at Capella is self-paced.