UPDATE: Bank of America Reiterates Underperform Rating, Raises PT on Education Management Corporation

In a report published Monday, Bank of America reiterated its Underperform rating on Education Management Corporation

, and slightly raised its price target from $3.25 to $4.00. Bank of America noted, “On Friday after the market close, EDMC announced a private offer to exchange its $375mn 8.75% Senior Notes due 2014 for cash and new 15% PIK notes due 2018. In our view, this offer resolves near term solvency issues. If EDMC had been unable to pay down, extend, or refinance the Senior Notes by 3/1/14, ~$1.1bn in term loans would have been due at that time given a springing maturity feature. However, concerns remain due to high leverage (post offering, ~$1.3bn in debt and $70mn in unrestricted cash) and weak student demand at its flagship Art Institutes brand (63% of F2Q13 revenue).” Education Management Corporation closed on Friday at $3.98.