United Education Offering Proceeds

A public offering of 1.8 million United Education & Software shares went ahead last week despite the drubbing the Encino company’s stock took in the market after state officials disclosed that they are reviewing student-aid programs at some of its schools.

The shares were sold at $11.50 each, or a total of $20.86 million. Of that, 1.47 million shares were sold by United Education for $16.9 million. United Education said it will receive about $15.6 million of that amount after paying fees to the investment bankers handling the stock sale.

The remaining 341,689 shares were sold by StanChart Equities, an affiliate of Union Bank in Los Angeles, for $3.9 million. Investment bankers selling the stock have been granted an option to sell an additional 272,000 shares.

Before selling the shares, StanChart had first exercised warrants--which are instruments that allow an investor to buy shares at a specified price--that it received in connection with a loan made to the company. United Education received an additional $1.1 million when those warrants were exercised.

Student-Aid Operations Under Review

Last month, the California Student Aid Commission disclosed that it is reviewing student-aid operations at 15 schools owned by United Education that operate under the Pacific Coast name. Greg Gollihur, deputy director of the commission, said the commission is reviewing whether some students received government-backed loans when they did not need the money and whether the schools are too slow in refunding tuition when a student drops out.

At the time of the disclosure, Gollihur said the review is “cause for concern.” In the wake of publicity about the review, the commission issued a written statement calling the review routine and adding that it has uncovered no serious problems so far. United Education declined comment on the review.

United Education’s stock, which had climbed as high as $16 a share, fell sharply after the disclosure. It closed at $11.625 on Monday.

United Education owns 33 trade schools that train people in such fields as welding, auto mechanics, bookkeeping, aircraft repair and court reporting. In the year ended Jan. 31, the company’s earnings more than doubled to $4.4 million, with revenue also more than doubling to $80.7 million.