Educomp up 10% amidst reports of acquisition

Stocks of education services company Educomp Solutions rose 9.9% on the Bombay Stock Exchange in early trades, amidst media reports of the company being in talks with a US firm for acquisition. A newspaper report today had said that a US-based company is in advanced talks with Educomp to acquire majority stake in the company.

Last week, Educomp had said that the request for restructuring its debts outstanding on reference date (July 08, 2013) comprising Working Capital Debt of Rs 399.04 crore and Long Term Debt of Rs. 83.05 crore with CDR Lenders has been approved by CDR Empowered Group.Education services company Educomp Solutions Ltd today said that it has got an approval for debt restructuring by the Corporate Debt Restructuring (CDR) Empowered Group.

The restructuring package agreed with CDR Lenders (led by State Bank of Patiala) envisages extended repayment tenure of 10 years including moratorium period of 2.5 years from Cut-off Date (April 1, 2013) and funding of interest for a period of 2 years from Cut-off Date.

Further, the company also got a nod from its shareholders to reappoint Shantanu Prakash for a period of three years from August 1, 2014 as the managing director of the company. According to the results of the postal ballot that the company shared on the Bombay Stock Exchange. Prakash's reappointment on a remuneration of Rs 1.5 crore also got shareholder's nod.

The company posted a third quarter net loss of Rs 87.6 crore for the period ended December 31, 2013 compared to net profit of Rs 8.01 crore for the same period last year.

Educomp's net sales fell to Rs 155.33 crore for Q3 FY14, down by 37% compared to Rs 271.12 crore for three-months ended December 31, 2012. Sequentially too, there was a 3.7% drop in net sales for December quarter compared to the September quarter.

Shantanu Prakash, CMD, Educomp Solutions had earlier told Business Standard that they are hopeful that FY15 will ease a lot of the current pain in the system and with a new government in place in mid 2014, the economy as a whole and education sector in particular will get a fillip.

In 2013, Educomp made two exits in what it calls non-core segments. Earlier this year, the company sold its entire 50% stake in the vocational training firm IndiaCan, to its joint venture partner Pearson. In August 2013, the company said that said it had laid off 3,500 people in three months to ensure employee strength rationalisation.

In March last year, they completed the sale of 50% stake in Eurokids International Limited to a group of investors led by GPE India. The company had said it made a profit of Rs 70 crore on this investment, and that the proceeds would be used for its core businesses.

At 10:47 am, Educomp stocks were trading at Rs 27.75, up by 9.9% over previous day's close on the Bombay Stock Exchange.