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First Marblehead(FMD), which purchased Tuition Management Systems at the beginning of the year for $47.25 million, has sold a portfolio of 377 contracts to FACTS, a subsidiary of Nelnet(NNI). First Marblehead said it decided to sell the contracts relating to lower cost schools, many faith-based, which accounted for 33% of contracts, but only 18% of revenue, to focus on higher cost institutions where there they can be more effective selling ancillary products. First Marblehead received $6.9 million for the contracts, a slightly lower valuation versus sales than they paid for the entire business, but probably similar or better on an earnings basis.
First Marblehead also reported that the TMS acquisition is ahead of projections so far:
“We are very pleased with the early results of our TMS acquisition,” said Daniel Meyers, Chief Executive Officer of First Marblehead. “Integration has proceeded well and the division went cash flow positive ahead of schedule as we continue to build out complementary product and service lines for the upcoming academic year.”
The company is reasonably well capitalized, but has struggled to find a successful model since the closure of the securitization markets in 2008.
Disclosure: The author owns shares in FMD
