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ITT Educational shares reeling after deal falls through

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Shares of Carmel-based ITT Educational Services Inc., a for-profit college operator, fell as much as 32 percent Monday morning after a deal to sell and lease back real estate fell through.

Shares slid to $9.72 in late-morning trading. The stock price has fallen about 70 percent since the beginning of the year, including Monday's loss.

College Portfolio Buyer LLC canceled the purchase of up to 24 properties on July 29, ITT said in a filing with the U.S. Securities and Exchange Commission after the markets closed Aug. 1. The sale would have brought ITT Educational as much as $119.1 million, the company said May 8 in a separate filing.

State attorneys general, the Consumer Financial Protection Bureau and the SEC are scrutinizing marketing, loan and accounting practices at ITT Educational. The company has said that the Education Department may require it to post a letter of credit to continue qualifying for federal student grants and loans.

The company also said on Aug. 1 that it was arranging financing for a letter of credit of as much as $98 million, an increase from $80 million, in case the Education Department demands it.

When questioned about College Portfolio Buyer, ITT spokeswoman Nicole Elam said that was a “generic” name used in the filing to identify an undisclosed potential buyer. ITT explored the sale as part of a review of its real estate holdings, she said.

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  • Same as K12 Charter Schools in Indiana
    Other than grade level, how is ITT different than K12 Charter schools in Indiana? Both invest as little as possible to maximize profit. All at the expense of the students. Like K12 charter schools in Indiana, it's not about graduation rates, it's about attendance and how many seats can be filled. More filled seats = more $. Look at Arlington HS / Tindley - EdPower run / as the K12 version of ITT.
  • Market Not Rewarding ITT
    Katherine - I think you have it backwards. The ITT business model sets up conditions for predatory lending for unneeded classes to many questionable students. ITT makes the loans seem easy and attractive and promotes high paying jobs to would be students. This company is all about profits rather than education. The market rewards and penalizes business models, business decisions, service consumers on the basis of performance and sustainability. Unfortunately for ITT, the market is speaking loudly.
  • It is bad for students and employees if ITT goes under
    It isn't good for Indiana or the rest of the country if ITT doesn't succeed. I worked there for years and they had the most conservative controls of any company I have worked for. They really do help students who want to succeed. The serve a portion of the population that most schools won't even allow to enroll. So, yes, they will have a higher drop out rate or default rate. But, if there are no longer schools that will give these students a chance, then where will they go? ITT serves students and creates jobs for Hoosiers and across the nation.
  • Good...
    I hope all of the other diploma mill, federal aide wasting, debt saddling, morally bankrupt for-profits go under. Somethings are NOT best served by the market, education being one of them.
  • uhhh
    The state can't just merge ITT with Ivy Tech. Ivy Tech is a private university and not state owned or run.
  • ITT has been on the edge for years
    What is it with ITT, they have been on the edge for years and have had ample time to clean up their business practices and loan practices. Perhaps it would be better if the State of Indiana took them over as a State run educational company and merged it with IVY Tech. Seems that they cannot escape their own bad business practices.

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