ITT Educational Services Inc., a for-profit college operator, fell the most since it went public almost 20 years ago after a deal to sell and lease back real estate fell through.
Separately, Kevin Modany, who has served as chief executive officer since 2007, will step down effective Feb. 4, 2015, Carmel, Indiana-based ITT said in a statement late today. John Dean, a company director, will fill a newly created role as executive chairman until a new CEO is hired, ITT said.
ITT slid 46 percent to $7.72 at the close in New York, the biggest decline since December 1994. The shares have lost 77 percent of their value this year.
College Portfolio Buyer LLC and ITT abandoned the deal involving as many as 24 pieces of property on July 29, Carmel, Indiana-based ITT said in a filing with the U.S. Securities and Exchange Commission released July 30. The sale would have brought ITT Educational as much as $119.1 million, the company said May 8 in a separate filing.
State attorneys general, the Consumer Financial Protection Bureau and the SEC are scrutinizing marketing, loan and accounting practices at ITT Educational. The company has said that the Education Department may require it to post a letter of credit to continue qualifying for federal student grants and loans.
The company also said on July 30 that it was arranging financing for a letter of credit of as much as $98 million, an increase from $80 million, in case the Education Department demands it.
When questioned about College Portfolio Buyer, ITT spokeswoman Nicole Elam said that was a “generic” name used in the filing to identify an undisclosed potential buyer. ITT explored the sale as part of a review of its real estate holdings, she said.
The real estate deal was canceled after the buyer asked for additional time for due diligence, and ITT declined because it would have limited the company’s options to negotiate with other parties, ITT said.
ITT gave no reason in the statement for the leadership change. Modany also resigned, effective today, as director and chairman of the board.