American Public Education, a company that aims to transform lives, advance careers and improve communities by providing online and campus-based postsecondary education to approximately 109,000 students, completed a comprehensive refinancing and entered into a new five-year, $130 million senior secured credit facility consisting of a $90 million senior secured term loan and a $40 million senior secured revolving credit facility. The new facility reduces the company’s borrowing spread by 375 basis points based on current leverage levels and is expected to generate approximately $3.7 million in annual interest savings while strengthening APEI’s balance sheet and providing increased financial flexibility to invest in its growth strategy.
The new credit agreement was entered into with PNC Bank as administrative agent and collateral agent, PNC Capital Markets as joint lead arranger and sole bookrunner, M&T Bank as a joint lead arranger and a syndicate of lenders.
The new facility is scheduled to mature on March 9, 2031, and borrowings thereunder are subject to a revolver commitment fee ranging from 0.20% to 0.35% and bear interest at a rate equal to SOFR plus between 1.75% and 2.75% depending on the company’s consolidated total net leverage ratio.
Proceeds from the new facility, together with cash on hand, were used to refinance the company’s existing $20 million senior secured revolving credit facility and to repay approximately $96.4 million outstanding under its prior $175 million senior secured term loan. The transaction reduces the company’s total outstanding debt, extends its maturity by over four years and lowers its borrowing rate, providing the company with the liquidity and flexibility to continue investing in enrollment growth across its three institutions.
“This transaction delivers three concrete improvements to our capital structure: an approximately 375 basis point reduction in our borrowing spread based on current leverage levels, a reduction in our total debt balance, and a five-year extension of our maturity runway to 2031,” Edward Codispoti, executive vice president and chief financial officer of American Public Education, said. “Together, these improvements significantly lower our annual interest expense and reduce near-term cash outflows, giving us additional ability to invest in enrollment growth at Rasmussen, APUS, and Hondros and continue executing on our long-term strategy. The terms we achieved are a direct reflection of the progress we have made as a business and the confidence our banking partners have in APEI’s trajectory.”
