December 9, 2010 (FinancialWire) (http://www.financialwire.net/) — Education Management Corp. (NASDAQ: EDMC), a provider of post-secondary education in North America, said that it has entered into an agreement to amend and extend its credit and guarantee agreement, which includes a $442.5 million revolving credit facility and a $1.1 billion term loan.

Under the agreement, revolving lenders have agreed to extend the maturity of commitments totaling $328.3 million under the facility from June 1, 2012 to June 1, 2015.  In addition, holders of an aggregate $761.6 million of the term loan have agreed to extend the maturity date from June 1, 2013 to June 1, 2016.

According to Education Management, lenders that agreed to extend the maturity of their revolving commitments will receive a margin increase of 2.5% from LIBOR + 1.5% to LIBOR + 4.0% and payment of an upfront fee.

Lenders with revolving commitments totaling $114.2 million have elected not to extend those commitments, which will mature on the original maturity date of June 1, 2012 and bear interest at the lower rate.  

Lenders that agreed to extend the maturity of the term loan will receive a margin increase of 2.25% from LIBOR + 1.75% to LIBOR + 4.0% and payment of an upfront fee.

Holders of an aggregate of $350.5 million of the term loan have elected not to extend the maturity date, and this amount will bear interest at the lower rate and will mature on June 1, 2013, the original maturity date.

Education Management said it expects to record additional interest expense of $1.6 million and one-time charges of $4.5 million in its second fiscal quarter ending December 31, 2010 due to the amendment and extension of the credit and guarantee agreement.

The lenders also approved amendments to the firm’s credit and guaranty agreement, including a “springing maturity” of March 1, 2014 for the term loans in the event that the company does not refinance, extend or pay in full its $375.0 million of senior notes due 2014 on or prior to March 1, 2014, an adjustment to the basket amount for capital expenditures and certain other purposes, and the ability to use cash to collateralize letters of credit.

The closing of the amendment to the credit and guarantee agreement is scheduled to occur December 7.

Pennsylvania-based Education Management operates a total of 101 locations in 31 U.S. states and Canada. The company offers academic programs to our students through campus-based and online instruction, or through a combination of both.

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