Intueri Education Group will quit Australia by the end of the year after losing federal government subsidies and is considering bids for some of its assets, saying it was probably in breach of its banking covenants in 2016.
The Auckland-based private education provider is undertaking a strategic review of operations in both Australia and New Zealand and is considering approaches from "a number of interested parties", it said in a statement.
Its Australian subsidiary, Conwal & Associates, won't reapply for the Australian Department of Education and Training's VET Fee-Help scheme to pay some or all of a student's fees, and Intueri will quit Australia altogether by the end of the year, seeking a buyer for its business across the Tasman, which is forecast to break even.
Intueri sold its Dive School, subject to conditions, which is expected to settle next month, and said a New Zealand Tertiary Education Commission investigation into its Quantum unit, which also attracted a review by the Serious Fraud Office, will be reported on shortly.
It reaffirmed its expectation that the company was in breach of its banking covenants and said it's still working with its lender, ANZ Bank New Zealand.
"Whilst there are opportunities to build our business operations without access to government VET funding, Intueri's current financial position does not allow us to put this medium term investment in place, and hence we are reviewing options to divest or close our Australian operations," chairman Chris Kelly said. "We remain in close dialogue with our banking partner and expect to make significant progress assessing capital restructuring and strategic options over the next two to three months."
The education provider raised about $60 million in an initial public offering in 2014 to fund the acquisition of the Quantum group and become the country's biggest private training organisation, selling shares at $2.35 apiece and valuing the company at $252.5m, but has slumped to just 3 cents, or $3m.
Intueri was stitched together by ASX-listed Arowana International, which kept a 24.9 per cent stake in the New Zealand company. The offer, which came in a year when the IPO pipeline was running hot, was managed by UBS New Zealand and Macquarie Securities (NZ).
However, the company's bid to go public was beset with troubles from the get-go. It had to amend its prospectus after a student died at its diving school, and needed a waiver to let it list with just 330 retail shareholders rather than the minimum 500 normally required.
That offer document got a ticking off by the Financial Markets Authority which said the prospectus could have been clearer about how student enrollment figures were disclosed without taking more action, while the TEC restricted enrollments for unfunded students and the SFO sought information about the Quantum school.
Intueri said it expects the SFO will end its inquiry once the TEC report is released, with Quantum the "only outstanding regulatory matter for Intueri's New Zealand operations".
In its 2016 annual report, Arowana said it had been "dismayed and very disappointed at what has transpired with Intueri Education" and that its engagement after the IPO had been "very limited and more than arm's length".