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Harbour Asset trims Intueri stake after education group anounces Australia exit, strategic review

Tuesday 7th February 2017

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Harbour Asset Management has sold down its stake in Intueri Education Group, ceasing to be a substantial shareholder following the company's disclosure on Friday that it will exit Australia after losing government subsidies and is considering bids for its assets while it undergoes a detailed strategic review.

The Wellington-based fund manager sold about 4 million shares of Intueri on Friday for $76,555, taking it from a 6.97 percent holding in the embattled private education company to 2.89 percent. It had previously reduced its holding from 9.64 percent in January, selling 2.4 million shares for $76,870. First NZ Capital, which owns 77 percent of Harbour, sold its remaining 0.3 percent holding in Intueri in January.

Intueri's shares plunged 50 percent to a record low 1.5 cents on Friday following its announcement. They had already dropped 95 percent over the course of 2016, hitting 3.2 cents at the end of the year. There was a 32 percent fall in Jan. 2016 when the company announced the Serious Fraud Office (SFO) was investigating its Quantum Education Group, and a further 80 percent slump in Sept. 2016 after it announced the Australian government audit which ultimately led to it not receiving subsidies in that country.

The company listed at $2.35 in 2014 after a $60 million initial public offering which funded the acquisition of Quantum, valuing it at $252.5 million. However, a raft of bad news, including the death of a student at its diving school, issues with its prospectus and the Tertiary Education Commission (TEC) reviewing its funding, meant the stock dropped 74 percent over 2015. It's now worth 1.5 million according to Reuters. 

Intueri wants to sell its Australian assets by the end of the year, having delisted its shares from the ASX in January. The company's Australian segment accounted for 35 percent of its $50.1 million of revenue in the six months ended June 30, 2016. The company's accounts for the year to Dec. 31, 2016, are due later this month. 

In New Zealand, the company is still under SFO investigation, with a TEC report on Quantum due soon, which the company has said it expects to allow the SFO to progress and end its inquiry. It has sold its Dive School, with the transaction expected to settle next month subject to conditions, leaving it with Quantum along with the Design & Arts College, which it consolidated from three campuses to one in 2016 as it had struggled for years and a number of private training colleges which it has amalgamated into Intueri Education New Zealand (IENZ).

Within its announcement last Friday, Intueri reaffirmed its expectation that it's in breach of its banking covenants and said it's still working with its lender, ANZ Bank New Zealand, to restructure its debt finance facilities.

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