Learndirect, the former state-owned training provider, has won a last-ditch reprieve from its lenders as it seeks to rebuild its finances in the wake of a controversial report by the education watchdog.
Sky News has learnt that a syndicate including Lloyds Banking Group and Royal Bank of Scotland (RBS) agreed to extend a £5m working capital facility to Learndirect ahead of a deadline for filing its accounts on Tuesday.
Securing the new borrowing headroom enabled EY, Learndirect’s auditor, to provide a going concern statement to Britain’s biggest adult training and apprenticeships provider, according to City sources.
The accounts for the 18 months to January, which are expected to be made public at Companies House in the coming days, will show a paper loss running to roughly £70m, the sources added.
This figure was largely made up of a £45m goodwill impairment along with roughly £10m of other one-off exceptional charges, they said.
Yorkshire Bank, part of CYBG, and Ares, a specialist lender, are also part of the club which have given Learndirect “a vote of confidence”, according to one person close to the company.
Learndirect is responsible for training more than 70,000 people, and has apprenticeship contracts with big private sector employers such as Marks & Spencer and Tesco.
The company, which is backed by the Lloyds-owned private equity firm LDC, was left reeling in the summer when details of a highly critical report from Ofsted were published.
Learndirect had warned that it faced collapse if the report was published, and has been told by the Department for Education that its funding will be withdrawn from July next year.
It will continue to receive £45m from the Education and Skills Funding Agency to enable it to wind down part of its business ahead of next summer’s deadline.
The National Audit Office, Parliament’s spending watchdog, has since promised to probe “the circumstances surrounding the monitoring, inspection and funding of Learndirect”.
Learndirect and LDC have disputed significant parts of Ofsted’s report and much of the subsequent media coverage of its difficulties.
The company has argued that contrary to suggestions, Learndirect’s shareholders had received no dividends or capital repayments since December 2013.
“Since that time some £37m has been re-injected into Learndirect by shareholders in an effort to stabilise the business under a backdrop of very significant funding cuts and changes in polices levied on the business with little notice by government bodies,” a source close to the company said.
Learndirect was bought by LDC in 2011 when the buyout firm acquired the parent Ufi Limited from the Ufi Charitable Trust (UCT).
Learndirect has recruited hundreds of thousands of apprentices to its programmes, a milestone which comes as the Government tries to meet a target of seeing three million apprenticeships delivered during this parliament.
UCT, a registered charity, was established in 1998 to use new technology to transform the delivery of learning and skills.
The brainchild of the Labour government elected in 1997, Learndirect was then set up in 2000 before being privatised by David Cameron’s Conservative-led coalition.
Learndirect and LDC both declined to comment on Tuesday.
Source: Sky