It appears as if a New Brunswick company may throw technology school ITI a life preserver.
Rick Buckingham, chairman of Fredericton-based Mosaic Technologies, said Tuesday that buying Halifax-based ITI Education Corp. would be a “big incremental step” for his company, but one that the national technology education provider thinks is in reach.
“The problem with ITI is not the students and it’s not the school,” Buckingham said from Fredericton. “The problem with ITI is that it is corporately mismanaged. If you took our culture and added it to their schools and forget about their head offices in Halifax, we think it would not only be economically viable, it would flourish.”
That interest is why Mosaic officials are in discussions in Halifax now. Buckingham expects some news by the end of this week or next, but because Torstar has given ITI a “short life line”, Buckingham said Mosaic will have to determine very quickly what its solutions will be.
“It’s all pretty premature,” he said. “We just got there on Monday and they went into solvency on Thursday. We are just trying to hand them an olive branch and find out what the issues are in the short term.”
Julie Kaufman, research manager skills research at IDC Canada, said that even with Mosaic’s strong history, it is a “very large purchase” for the company.
“ITI has a number of problems that Mosaic is going to have to deal with and turn that business around very quickly and make some harsh decisions,” she said. “Is it impossible? Absolutely not, but it will be a challenge.”
Some of those harsh decisions may include office closures, Kaufman continued, and a purchase of this size will change Mosaic’s company structure “fundamentally.”
“For a company of that size to step up to bat so quickly, they may have been talking about it for some time,” she said, adding that a number of companies would have been interested in ITI over time. “Mosaic is from the same region, so they may have been familiar with them just for that reason.”
Kaufman said Mosaic has made acquisitions of troubled companies before and they have the skills to do it with ITI. But because of the sheer size and money, it will still be a challenge, though she suspects that the New Brunswick government may be offering help in this deal.
ITI, which has seven branches across the country and a total of 1,325 students, went into receivership late last week. After that announcement, publishing giant Torstar announced that its third quarter results would include a write-off of the its remaining investment in ITI, estimated to be $25 million, or 33 cents per share, after tax. Just a few weeks previous, the company closed its U.S. schools and announced a net loss of $18.4 million in its second quarter
Mosiac announced profits last week for the fifth straight quarter and Buckingham estimated that the company made about $5 million in sales last year and projected $10 million in sales for this year.
“We think we can do something with it (ITI) and if we don’t do something with it, I don’t know who will and it will just collapse,” Buckingham said, adding that Mosaic would keep ITI’s brand name. “But we would be misinforming people if we said that we could take what they have got, with all the bloat that they had, and operate it the same way it is now.”
Buckingham said he didn’t think they would be scaling down student’s seats at ITI, but acquiring ITI would mean that Mosaic could cut some redundant positions.
“There has got to be some consolidation and some economies of scale brought to the schools and that is just common sense,” he said. “Could we do it? Yes. Is it a stretch? Yes. Do we think we can do it? Absolutely.”
ITI in Halifax is at http://www.iti.com/
Mosaic, in Fredericton, is at http://www.mosaictechnologies.com/
Torstar Corp. in Toronto is at http://www.torstar.com/