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AIFS Inc. Says It Owns 5% of United Education

June 27, 1989

AIFS Inc., a San Francisco company that sells and operates educational programs, disclosed in a U.S. Securities and Exchange Commission filing that it owns 5% of United Education & Software, a troubled chain of vocational schools based in Encino.

In the document, AIFS said it may seek to take over the company, although such wording is common in SEC filings that disclose stock ownership. In an interview, Roger O. Walther, AIFS chief executive, said the company is investing in United Education because he believes that its stock price does not reflect the company's value.

"We plan to wait and watch to see how they work out their problems," Walther said. "We don't have any specific course or plans right now."

Founded in 1964, AIFS operates study-abroad programs for students, schools that teach English and other education programs. In the year that ended Sept. 30, the company earned $536,000 on revenue of $95.6 million.

United Education was at the center of what has been called the biggest fiasco in the history of the nation's government-guaranteed student loan program. The problems stemmed from a unit the company formerly owned that serviced student loans.

Last year, a review led by the U.S. Department of Education discovered numerous servicing problems, such as collection procedures, at the unit. The company blamed the problems on computer software problems, although state and federal authorities said they also found widespread sloppiness in United Education's servicing operation.

In the wake of the review, United Education's stock plunged from more than $16 a share to less than $2. United Education closed at $2.875 Monday in over-the-counter trading.

In the fiscal year that ended Jan. 31, United Education lost $14.3 million as revenue rose 15%, to $81.1 million. The results included an $8.8 million loss from the discontinued student-loan servicing operation.

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