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Sterling National Bank Provides $55MM Credit Facility to Lincoln Educational Services

April 07, 2017, 07:09 AM
Filed Under: Education

Lincoln Educational Services Corporation announced it has completed a new $55 million secured revolving credit facility with Sterling National Bank. The new credit facility, which expires in May 2020, replaces an existing $45 million term loan that has been repaid in full and terminated concurrently with the closing of the new credit facility.

"This new credit facility provides us with a number of advantages over our previous credit facility, chief of which is an expected reduction in interest expense by $3 million a year beginning in 2018," said Scott Shaw, President & CEO of Lincoln. "In addition, the terms of the new credit agreement afford increased operating flexibility for our company as well as access to an additional $5 million dollars in working capital as compared to our previous credit agreement.  The new credit agreement also permits us to receive the full proceeds netted from the pending sale of our West Palm Beach, Florida property. Our previous term loan agreement required us to allocate $10 million of proceeds from the pending sale to principal pay down. We believe the new credit facility provides Lincoln with the resources to execute our operating plan for the next several years."

The new $55 million credit facility provides Lincoln with up to $50 million of revolving loans, including a $10 million sublimit for letters of credit, requires that revolving loans in excess of $25 million be cash collateralized dollar for dollar, and also provides Lincoln with an additional $5 million non-revolving loan. The proceeds of the $5 million non-revolving loan are held in an account at Sterling National Bank and will be used to reimburse Lincoln for costs incurred for potential environmental remediation at certain of the mortgaged properties. When any such environmental remediation is completed or determined to be unnecessary, the funds remaining in the account will be used to repay the non-revolving loan and the credit facility will be permanently reduced to $50 million. 

Charles Jones, Managing Director at Sterling National Bank, commented, "Lincoln offers exceptional educational opportunities and contributes to the enhancement of the skilled work force in the markets it serves.  The company has made great progress during the past several years and we look forward to working with management to provide the financial resources that enable execution of their operating strategies."

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