SOURCE: The First Marblehead Corporation

The First Marblehead Corporation

June 30, 2011 16:06 ET

First Marblehead Subsidiary TMS Sells Lower Cost K-12 School Contracts to FACTS Management Company for Approximately $6.9 Million

BOSTON, MA--(Marketwire - Jun 30, 2011) - The First Marblehead Corporation (NYSE: FMD) today announced that its subsidiary, Tuition Management Systems LLC (TMS), has sold a portfolio of contracts with 377 lower cost private, predominantly faith-based primary and secondary schools to FACTS Management Company, a Nelnet company (NYSE: NNI). The cash proceeds of this sale, which closed today, were approximately $6.9 million.

"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."

"Consistent with our overall approach, while this sale represents 33% of the contracts we purchased six months ago, they accounted for only 18% of TMS' overall revenue in calendar 2010," said Meyers. "We have chosen to concentrate our efforts on higher cost institutions where we seek to improve access by bringing more affordable payment options and services to bear."

Under the terms of the transaction, TMS will continue to service these schools through the upcoming school year. A portion of the purchase price will be placed in escrow in connection with potential post-closing adjustments based upon client retention.

"We are excited to have reached an agreement with TMS that gives us an opportunity to develop new relationships with 377 private and faith-based schools that fit well with our K-12 strategy," said Tim Tewes, Chief Executive Officer of FACTS. "During the next year, we will partner with TMS to ensure the transition to our systems and support team is as seamless as possible for the schools as well as the families they serve."

About The First Marblehead Corporation -- First Marblehead helps meet the need for education financing by offering national and regional financial institutions and educational institutions the Monogram® platform, an integrated suite of design, implementation and credit risk management services for private label, customizable private education loan programs. For more information, go to www.firstmarblehead.com. First Marblehead supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans; please see www.SmartBorrowing.org.

First Marblehead also offers outsourced tuition planning, billing and payment technology services through its subsidiary Tuition Management Systems LLC. TMS provides comprehensive education payment solutions to more than 300,000 students attending higher education and private elementary and secondary schools served by TMS. TMS' solutions for schools and their students include early affordability counseling and advice, BorrowSmart®, student bill production, budget plans and payment acceptance and processing. Located in Warwick, RI, TMS was established in 1985. For more information, go to www.afford.com.

About FACTS Management Company -- As part of Nelnet, FACTS Management Company (www.factsmgt.com) is committed to making educational dreams possible for families and students, as well as enhancing the financial stability and affordability of educational institutions. FACTS now serves 5,000 schools and over one million families, and manages approximately $3 billion in tuition funds each year. FACTS offers a comprehensive suite of services for schools including tuition and other payment administration and processing, financial needs assessment, web-based enrollment services, fundraising solutions, and college and career planning resources available through Peterson's.

Statements in this press release regarding the strategy, future financial or operating results, competitive position, future products and opportunities, and growth prospects of The First Marblehead Corporation, including its subsidiary Tuition Management Systems LLC ("TMS"), as well as any other statements that are not purely historical, constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our historical performance, including the historical performance of TMS, and on our plans, strategies, estimates and expectations as of June 30, 2011. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future results, plans, strategies, estimates, intentions or expectations expressed or implied by us will be achieved. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause our actual financial or operational results, including the performance of TMS and resulting cash flows, or the timing of events, to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: our success in designing, implementing and commercializing products and services to be offered by TMS, including additional products and services to be offered to TMS' remaining primary and secondary school clients; our success in executing TMS' strategy for primary and secondary schools, including our success in identifying and contracting with additional educational institutions; our success in providing transition services to educational institutions on behalf of FACTS Management Company following the closing of the sale of our contracts with such educational institutions; the retention of clients by FACTS Management Company following the closing of the sale, which could result in post-closing purchase price adjustments; receipt of certain third party consents in connection with the transaction; and the other factors set forth under the caption "Part II - Item 1A. Risk Factors" in First Marblehead's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2011. We specifically disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release, even if our plans or estimates change, and you should not rely on those statements as representing our views as of any date subsequent to the date of this press release.

© The First Marblehead Corporation

Contact Information

  • Contacts:
    First Marblehead Investors and Media:
    David Hartung
    617.638.2011

    Nelnet Media:
    Ben Kiser
    402.458.3024

    Nelnet Investors:
    Phil Morgan
    402.458.3038