Navitas crunched on uni drop-out
UPDATE 2.30pm: Investors have fled Navitas after Macquarie University in Sydney decided to end its agreement with the education services provider and set up its own college for students seeking pathways from high school into university.
Navitas said its Sydney Institute of Business Technology (SIBT) partnership agreement with Macquarie would be extended for another year until February 2016 but would end after that.
"By the first semester of 2016, Macquarie University intends to offer its own on-campus pathway programs," the company said in a statement.
"From this time, SIBT will continue to operate a Sydney CBD location and place students into Macquarie University as a Streamlined Visa Processing (SVP) partner.
"This arrangement is subject to annual review."
Macquarie deputy vice-chancellor (international), Professor Jim Lee, said while the university and Navitas had enjoyed a long and successful partnership, the university had evolved and grown to a stage where the time was right for it to establish its own pathway college.
"Now in our 50th year, Macquarie has matured into a well-known and highly regarded research-intensive university." he said.
"Given our trajectory and our new strategic framework under the guidance of a new vice-chancellor and leadership team, it makes perfect sense to invest in our own pathway college, as many other prestigious universities have done before us."
Professor Lee said the university would work closely with Navitas to ensure the administrative change did not affect current students.
Students enrolled in SIBT prior to the opening of the new college would still be eligible to transition to Macquarie upon successful completion of their pathway studies.
Navitas chief executive Rod Jones said the loss of SIBT's capacity to deliver programs on Macquarie University's North Ryde campus was disappointing and would likely result in a one-off decline in growth in university programs earnings which would impact the second half of FY2016 and the first half of FY2017.
"It is expected that this impact will be mitigated by other growth initiatives," he said.
Mr Jones reaffirmed previous EBITDA guidance for the recently ended financial year but warned of a one-off, non-cash goodwill impairment charge of up to $40 million.
The news sent Navitas shares plummeting more than 30 per cent as investors feared the decision called in to question the company's entire business model and speculated that other institutions might follow Macquarie's lead.
The slump wiped about $1 billion off the company’s market capitalisation and shaved about $100 million off Mr Jones’ personal net worth, based on his 12 per cent stake in the company.
However Mr Jones defended the company's University Programs business model, saying it continued to enjoy growing enrolments.
"Navitas' broader growth strategy across University Programs, SAE and Professional and English Programs will continue to deliver value for students, partners and shareholders well into the future," he said.
Navitas shares closed down $2.18, or 30.97 per cent, at $4.86 after touching an intraday low of $4.43.
