SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. 1)
Strayer Education, Inc.
(NAME OF ISSUER)
Common Stock, par value $.01 per share
(TITLE OF CLASS OF SECURITIES)
863236105
(CUSIP NUMBER)
Steven B. Klinsky with copies to:
New Mountain Partners, L.P. Trevor S. Norwitz
712 Fifth Avenue, 23rd Floor Wachtell, Lipton, Rosen & Katz
New York, New York 10019 51 West 52nd St
(212) 720-0300 New York, NY 10019
(212) 403-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
May 15, 2001
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
NOTE. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
(Page 1 of 13 Pages)
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Person
New Mountain Partners, L.P.
13-4099832
(2) Check the Appropriate Box if a Member of a Group (a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
AF, OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None
Shares
Beneficially (8) Shared Voting Power 6,769,231
Owned by
Each (9) Sole Dispositive Power None
Reporting
Person With: (10) Shared Dispositive Power 6,769,231
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
6,769,231 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
48.0%
(14) Type of Reporting Person
PN
(Page 2 of 13 Pages)
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Persons
New Mountain Investments, L.P.
13-4099829
(2) Check the Appropriate Box if a Member of a Group (a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
AF, OO
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None
Shares
Beneficially (8) Shared Voting Power 6,769,231
Owned by
Each (9) Sole Dispositive Power None
Reporting
Person With: (10) Shared Dispositive Power 6,769,231
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
6,769,231 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
48.0%
(14) Type of Reporting Person
PN
(Page 3 of 13 Pages)
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Persons
New Mountain GP, LLC
13-4099827
(2) Check the Appropriate Box if a Member of a Group (a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
AF, OO
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None
Shares
Beneficially (8) Shared Voting Power 6,769,231
Owned by
Each (9) Sole Dispositive Power None
Reporting
Person With: (10) Shared Dispositive Power 6,769,231
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
6,769,231 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
48.0%
(14) Type of Reporting Person
OO
(Page 4 of 13 Pages)
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Persons
Steven B. Klinsky
(2) Check the Appropriate Box if a Member of a Group (a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
OO, PF
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
United States of America
Number of (7) Sole Voting Power None
Shares
Beneficially (8) Shared Voting Power 6,769,231
Owned by
Each (9) Sole Dispositive Power None
Reporting
Person With: (10) Shared Dispositive Power 6,769,231
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
6,769,231 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
48.0%
(14) Type of Reporting Person
IN
(Page 5 of 13 Pages)
ITEM 1. SECURITY AND ISSUER
The statement on Schedule 13D (the "Schedule 13D"), filed jointly on March
26, 2001 by the persons listed on the signature page thereto relating to the
beneficial ownership of the Common Stock, par value $.01 per share ("Common
Stock"), of Strayer Education, Inc., a Maryland corporation (the "Issuer") and
the contemplated ownership of Series A Preferred Stock, par value $.01 per share
of the Issuer, which are convertible into Common Stock, is hereby amended and
supplemented as set forth below (the "Amendment") by the persons listed on the
signature page hereto (the "Reporting Persons"). The principal executive offices
of the Issuer are located at 1025 Fifteenth Street, N.W., Washington, D.C.
20005. Capitalized terms used below and not otherwise defined herein shall have
the meanings set forth in the Schedule 13D.
ITEM 2. IDENTITY AND BACKGROUND
This Amendment is jointly filed by the Reporting Persons. Item 2 of the
Schedule 13D is unchanged and is hereby incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The disclosure in Item 3 is hereby amended and supplemented by adding the
following:
On May 15, 2001 (the "Closing Date"), the Issuer, New Mountain and DB
Capital consummated the purchase and sale of the Series A Preferred Stock as
contemplated by the Purchase Agreement. At the Closing as defined in the
Purchase Agreement, New Mountain and DB Capital were issued 4,423,077 and
1,346,154 shares of Series A Preferred Stock, respectively, in consideration for
an aggregate of $150 million in cash that was transferred out of escrow to the
Issuer for use in the Issuer's Self-Tender. Upon the Closing, the irrevocable
proxy granted to New Mountain and DB Capital, dated March 16, 2001 from the Ron
K. Bailey and Beverly W. Bailey (the "Baileys"), as described in the Schedule
13D, was terminated.
The funds that New Mountain put in escrow on March 16, 2001 were obtained
from capital contributions from its partners.
ITEM 4. PURPOSE OF THE TRANSACTION
The disclosure in Item 4 is hereby amended and supplemented by adding the
following:
On May 15, 2001, New Mountain was issued 4,423,077 shares of Series A
Preferred Stock in connection with the consummation of its investment in the
Issuer. New Mountain and DB Capital invested $150 million in the Issuer in
return for the Issuer's Series A Preferred Stock, which is convertible into
Common Stock. The Issuer used this money and approximately $30 million of cash
on hand to complete the Self-Tender and to pay for the 7,175,000 shares tendered
by the Baileys in the Self-Tender. In addition, in connection with the Support
and Option Agreement, the Baileys granted New Mountain an option to purchase up
to 767,000 of their shares at a price of $30.00 per share.
As previously described in the Schedule 13D, pursuant to the Purchase
Agreement and Shareholders Agreement, New Mountain appointed four directors of
the Issuer's twelve-member Board and with DB Capital jointly appointed a fifth
director. New Mountain's appointees are
(Page 6 of 13 Pages)
Steven B. Klinsky, Robert R. Grusky, J. David Wargo and Gary S. Gensler. New
Mountain jointly with DB Capital also appointed William E. Brock as a director.
Additionally, as required by the Shareholders Agreement, New Mountain supported
DB Capital's appointment of Steven K. Dollinger as a director.
The description of the Purchase Agreement, other related agreements, other
related documents and the transactions contemplated thereby ("the Transaction")
and the Exhibits to the Schedule 13D are not intended to be complete, and are
qualified throughout by reference to such documents. In addition, the
Transaction is described in the Proxy Statement of the Issuer dated February 14,
2001 relating to a Special Meeting of Stockholders, which was filed with the
Securities and Exchange Commission.
(a) Pursuant to the Purchase Agreement, New Mountain purchased from the
Issuer 4,423,077 shares of Series A Preferred Stock for $115 million and DB
Capital purchased from the Issuer 1,346,154 shares of Series A Preferred Stock
for $35 million. The Articles Supplementary, which governs the terms of the
Series A Preferred Stock, were filed with the State Department of Assessments
and Taxation of Maryland on May 15, 2001 and are incorporated herein by
reference.
Under the Articles Supplementary the holders of the Series A
Preferred Stock have the right to elect (w) at least one half of the members of
the Board for so long as at least 90% of the votes that can be cast by the
holders of the Series A Preferred Stock on the Closing Date remain outstanding,
(x) at least 40% of the members of the Board for so long as at least 50% of the
votes that can be cast by the holders of Series A Preferred Stock on the Closing
Date remain outstanding, (y) at least 25% of the members of the Board for so
long as at least 25% of the votes that can be cast by the holders of the Series
A Preferred Stock on the Closing Date remain outstanding, or (z) at least one
member of the Board for so long as at least 10% of the votes that can be cast by
the holders of the Series A Preferred Stock on the Closing Date remain
outstanding. As discussed previously in the Schedule 13D, New Mountain and DB
Capital have, pursuant to the Shareholders' Agreement, agreed as to how such
rights to elect members of the Board will be allocated between themselves.
Additionally, as long as clause (w) or (x) above is satisfied, the Issuer shall
not, and shall not permit any of its subsidiaries to, without the consent of the
majority of the directors elected by the holders of the Series A Preferred
Stock, effect or validate any of the following:
(i) any authorization or issuance, reclassification, repurchase,
redemption or other acquisition of any of its equity securities or any
rights, warrants, options or other securities exercisable for, convertible
into or otherwise carrying the right to acquire any equity securities, or
any derivative or similar securities with respect to any of the foregoing;
(ii) any issuance or incurrence of (or agreement to issue or incur,
including by way of an acquisition of any entity, or any merger, business
combination or similar transaction or as a result of any amendment to any
indenture, credit agreement or other similar instrument) indebtedness
(other than trade payables) if, after giving effect thereto, the Issuer's
indebtedness (other than trade payables) would be greater than $25
million, on a consolidated basis;
(iii) the liquidation, dissolution, winding up or reorganization
of the Issuer;
(Page 7 of 13 Pages)
(iv) any transaction or series of related transactions involving a
change of control of the Issuer or the sale of all or substantially all of
the equity or assets of the Issuer, or any acquisition, disposition or
other business combination transaction (or series of transactions)
involving consideration in an amount greater than $20 million in the
aggregate;
(v) any amendment to the Issuer's charter or bylaws; or
(vi) the removal or replacement of, or the establishment of the
level or form of compensation payable to, the Issuer's Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer.
Under the Articles Supplementary, each share of the Series A
Preferred Stock shall entitle its holder at any time to vote on all matters
entitled to be voted on by the holders of Common Stock (or any other voting
security) voting together as a single class therewith (with each share of Series
A Preferred Stock being entitled to the number of votes equal to the number of
shares of Common Stock into which such Series A Preferred Stock is convertible
into at such time). In addition, as long as any shares of the Series A Preferred
Stock are outstanding, the affirmative vote of the holders of at least a
majority of the Series A Preferred Stock then outstanding acting as a single
class shall be necessary for effecting, entering into, engaging in or approving:
(i) any reclassification of the Series A Preferred Stock or any
change in the Issuer's charter or bylaws, which would adversely affect
the dividend or liquidation preferences, voting powers or other rights of
the holders of the Series A Preferred Stock;
(ii) the authorization or creation of, or the increase in the
authorized amount of, or issuance of any shares of any class or series of
(or reclassification of any securities into) securities of the Issuer
ranking senior or on par with the Series A Preferred Stock with respect to
distributions or rights on liquidation, or any security convertible into
or exercisable for or otherwise representing the right to acquire any such
securities or any derivative or similar securities representing any of the
foregoing;
(iii) any issuance of shares of Common Stock at a price equal to or
less than $26 per share, adjusted to reflect any changes in capitalization
of the Issuer after the Closing Date, or of securities convertible into or
exchangeable for, or otherwise representing the right to acquire, Common
Stock for a consideration per share equal to or less than $26 per share,
as adjusted, based on the initial consideration paid; and
(iv) the declaration, payment or making of any dividend or other
distribution in respect of any shares of the stock of the Issuer other
than dividends on the Series A Preferred Stock and the regular quarterly
dividends in cash (adjusted to reflect changes in the Common Stock after
the Closing Date), provided that Board may without a vote of the holders
of the Series A Preferred Stock nominally increase such regular quarterly
dividend.
The holders of shares of the Series A Preferred Stock, pursuant to
the Articles Supplementary, are entitled to receive dividends prior to any
amounts being paid on the Common Stock when, as and if declared by the Board out
of funds legally available therefor.
(Page 8 of 13 Pages)
Dividends on the Series A Preferred Stock are payable as follows:
(i) from the Closing Date until the fifth anniversary of that date,
dividends accrue at an annual rate of 7.0% of the sum of the
liquidation amount, which liquidation amount on the Closing Date
was $26.00 per share, plus any accumulated and unpaid dividends,
with .0875% of that amount payable in cash each quarter and the
balance shall accumulate and compound quarterly until the Series A
Preferred Stock either converts, is redeemed, or a liquidation
event occurs; and
(ii) beginning the day after the fifth anniversary of the Closing Date,
dividends accrue at an annual rate of 3% of the sum of the
liquidation amount plus any accumulated and unpaid dividends, all of
which are payable in cash when the dividend is declared.
In addition, when and if the Board declares regular quarterly dividends on
the common stock up to $0.065 per share, holders of the Series A Preferred Stock
are not entitled to participate in the Common Stock dividend. However, the
Series A Preferred Stock will participate on an as-converted basis in any
dividends on Common Stock in excess of the regular quarterly dividends.
The Reporting Persons do not intend to amend or supplement the Schedule
13D as amended to reflect the additional shares of Common Stock, which may be
issued upon conversion of the Series A Preferred Stock, due solely to the
accrual and addition of dividends to the liquidation preference.
In addition, the Purchase Agreement and the Charter, as amended, which was
filed with the State Department of Assessments and Taxation of Maryland on May
15, 2001, provides New Mountain and DB Capital with preemptive rights with
respect to certain issuances of Common Stock after the Closing. Upon the
consummation of the purchase and sale of the Series A Preferred, the irrevocable
proxy to vote 8,175,000 which was granted by the Baileys to New Mountain and DB
Capital was terminated.
On May 15, 2001, the Issuer consummated the Self-Tender and purchased
7,175,000 shares from the Baileys in the tender.
In addition, effective as of May 15, 2001, pursuant to the Support and
Option Agreement, New Mountain has the right to acquire up to 767,000 shares of
Common Stock from Mr. and Mrs. Bailey under the Option.
(e) The Issuer used approximately $30 million of its cash on hand and the
$150 million of the purchase price of the Series A Preferred Stock to effect the
Self-Tender. The 7,175,000 shares of Common Stock tendered to the Issuer was
canceled and returned to the status of authorized but unissued stock, which
reduced the amount of Common Stock outstanding from 15,514,882 (the number of
shares outstanding on May 15, 2001 prior to the consummation of the Self-Tender)
to 8,339,882 shares. There are authorized and outstanding 5,769,231 shares of
Series A Preferred Stock. The holders of shares of Series A Preferred Stock are
entitled to dividends in the amount and for the periods of time as more fully
described in the Articles Supplementary.
(Page 9 of 13 Pages)
(g) The charter amendment became effective on May 15, 2001. Upon the
issuance of the shares of Series A Preferred Stock under the Purchase Agreement,
there were approximately 2.2 million shares of "blank check" preferred stock
available for issuance.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The disclosure in Item 5 is hereby amended and supplemented by adding the
following:
(a) As of the date of this Amendment, the Reporting Persons may be deemed
to beneficially own an aggregate of 6,769,231 shares of Common Stock which
include:
(i) 5,769,231 shares of Common Stock issuable upon the conversion of
5,769,231 shares of Series A Preferred Stock. Of the shares of Series
A Preferred Stock 4,423,077 are owned directly by the Reporting
Persons, and the beneficial ownership of 1,346,154 shares of Series A
Preferred Stock, which are currently convertible into 1,346,154 shares
of Common Stock, arises from the Shareholders Agreement, which
provides the Reporting Persons with the ability to require that DB
Capital participate pro rata in certain sales of securities to a party
that is not an affiliate of New Mountain and provides that each of the
Reporting Persons and DB Capital support their respective individual
and joint Board nominees. The Articles Supplementary provide that some
of the dividends will be accrued and added to the liquidation
preference, thereby increasing the number of Common Shares into which
the Series A Preferred Stock will be convertible. The Reporting
Persons do not intend to amend or supplement the Schedule 13D as
amended to reflect the additional shares of Common Stock which may be
issued upon conversion of the Series A Preferred Stock, due solely to
the accrual of dividends to increase the liquidation preference.
(ii) the Option granted to New Mountain and DB Capital to purchase up to
1,000,000 shares of Common Stock from the Baileys. Of this 1,000,000
shares, an option to purchase 767,000 was granted directly to New
Mountain and an option to purchase the other 233,000 was granted to DB
Capital.
Assuming the number of shares outstanding on May 16, 2001, the Reporting Persons
may be deemed to beneficially own approximately 48.0% of the outstanding Common
Stock, on a fully diluted basis. The Reporting Persons hereby disclaim
beneficial ownership of the Series A Preferred Stock and the Option (and the
shares issuable upon conversion of the Series A Preferred Stock and/or the
exercise of the Option) to the extent owned by DB Capital.
(b) The Reporting Persons and DB Capital may be deemed to comprise a group
for the purposes of voting for directors and disposing of shares under the
Stockholders Agreement, which is hereby incorporated by reference herein. As of
the date of this Amendment, the Reporting Persons and DB Capital have shared
voting power to direct the vote of 6,769,231 shares and have shared power to
direct the disposition of 6,769,231 shares. Of this shared power to direct the
disposition of shares, the power over 1,579,154 shares is shared with DB
Capital, pursuant to New Mountain's drag-along rights. The Reporting Persons
have the sole power to vote and sole power to direct the disposition of 0 shares
and disclaim beneficial ownership of the Series A Preferred Stock and the shares
issuable upon conversion of the Series A Preferred Stock and/or the Option.
(Page 10 of 13 Pages)
For purposes of Section 13 of the Act, NMI may be deemed to control New
Mountain, NM may be deemed to control NMI and Mr. Klinsky may be deemed to
control NM. Each of the Reporting Persons may thus be considered to beneficially
own and to have shared voting power with respect to all of the Series A
Preferred Stock and Common Stock held beneficially by New Mountain and shared
dispositive power with respect to 6,769,231 shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUERS
The disclosure in Item 6 is hereby amended and supplemented by adding the
following:
The Registration Rights Agreement (the "Registration Rights Agreement"),
dated as of May 15, 2001 between the Issuer, New Mountain and DB Capital governs
the rights of the holders of the shares of the Series A Preferred Stock to
require the Issuer to register the Series A Preferred Stock or the Common Stock
or other securities issuable upon conversion of the Series A Preferred Stock.
The rights include, among other things, two full demand registrations, unlimited
S-3 registrations (provided that no more than 2 per year can be requested and
that the Issuer is S-3 eligible) and piggyback registration rights. The Issuer
has agreed to pay all registration expenses incurred in connection with the
exercise of the registration rights. All requests for registration are subject
to customary terms and conditions. The Registration Rights Agreement is included
as Exhibit 99.3 to this Statement and is incorporated herein by reference.
Other than the Registration Rights Agreement, Shareholders Agreement,
Purchase Agreement, Support and Option Agreement and the related documents and
the transactions contemplated thereby and other understandings, as described in
this item, Item 3 and Item 4 above or in the Schedule 13D, which is incorporated
by reference herein, the Reporting Persons know of no other contracts,
arrangements, understandings or relationships required to be described herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
99.3 Form of Registration Rights Agreement (incorporated by reference
to Exhibit 10.02 to the Current Report on Form 8-K filed by
Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)).
(Page 11 of 13 Pages)
SIGNATURES
After reasonable inquiry and to the best of his or her knowledge and
belief, each of the undersigned certifies that the information in this statement
is true, complete and correct.
Date: May 21, 2001
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P., its
general partner
By: New Mountain GP, LLC, its
general partner
By: /s/ Steven B. Klinsky
---------------------------------------
Name: Steven B. Klinsky
Title: Member
NEW MOUNTAIN INVESTMENTS, L.P.
By: New Mountain GP, LLC, its
general partner
By: /s/ Steven B. Klinsky
---------------------------------------
Name: Steven B. Klinsky
Title: Member
NEW MOUNTAIN GP, LLC
By: /s/ Steven B. Klinsky
---------------------------------------
Name: Steven B. Klinsky
Title: Member
/s/ Steven B. Klinsky
---------------------------------------
Name: Steven B. Klinsky
(Page 12 of 13 Pages)
INDEX TO EXHIBITS
-----------------
99.3 Form of Registration Rights Agreement (incorporated by reference
to Exhibit 10.02 to the Current Report on Form 8-K filed by
Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)).
(Page 13 of 13 Pages)