Adtalem Global Education Inc. -- Moody's says Adtalem's sale of its financial services portfolio supports deleveraging, a credit positive

Announcement: Moody's says Adtalem's sale of its financial services portfolio supports deleveraging, a credit positiveGlobal Credit Research - 24 Jan 2022New York, January 24, 2022 -- Moody's Investors Service ("Moody's") says Adtalem Global Education Inc.'s ("Adtalem") sale of its financial services portfolio is credit positive because Moody's expects that the vast majority of proceeds would be used to pay down debt. However, there is no immediate impact to the company's ratings at this time, including the B1 Corporate Family Rating and stable outlook, since the net cash proceeds after taxes and fees, and the use of proceeds, have yet to be determined by Adtalem.Adtalem entered into a definitive agreement to sell its financial services portfolio to a consortium of buyers comprised of Wendel Group ("Wendel") and Colibri Group ("Colibri") in an all-cash transaction for an aggregate purchase price of $1 billion. The transaction is expected to close in the quarter ending March 31, 2022, subject to customary closing conditions. As part of the transaction, the Association of Certified Anti-Money Laundering Specialists will be sold to Wendel and Becker Professional Education and OnCourse Learning will be sold to Colibri. If closing conditions are satisfied for one buyer party and not the other, Adtalem has the unilateral option to close with one buyer. As of LTM September 30, 2021, the financial services segment generated revenues of approximately $215 million and $50 million of company-calculated EBITDA, implying a 20x multiple sale price.Adtalem previously acquired Walden University ("Walden") in August 2021 for approximately $1.5 billion funded with $800 million of notes, an $850 million term loan and available cash on hand. Moody's estimates that pro-forma Moody's adjusted leverage was approximately 3.8x as of LTM September 30, 2021. Moody's expects that the vast majority of net proceeds from the sale of the financial services portfolio will be used to repay debt given that management has publicly committed to reducing company-calculated net leverage below 2x within 24 months of the Walden transaction close. Adtalem's second quarter fiscal 2022 conference call is scheduled for February 8, and the company is expected to provide additional information on the transaction. Depending on the amount of debt repaid, Moody's estimates that Moody's adjusted leverage could potentially decrease as much as a full turn. The degree of leverage reduction may result in a positive rating action if Moody's expects the company would decrease and sustain leverage below 2.75x in the near term while maintaining balanced financial policies and a very good liquidity profile.Headquartered in Chicago, Illinois, Adtalem Global Education Inc. is a global provider of educational services with a focus on Medical and Healthcare and Financial Services. The company operates seven educational institutions across the US and Caribbean. Revenue totaled approximately $1.2 billion as of LTM September 30, 2021.This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. Sean Cray Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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