National Education Gets Year Extension on Loans : Recovery: Beleaguered Irvine firm buys time in repaying $62 million. It seeks to battle back from losses totaling $8 million in the last six months.

National Education Corp. said Thursday it has obtained a one-year extension on some $62 million in loans, giving the beleaguered company added time to try to recover from a series of costly blunders.

Five different banks agreed to the extension, provided NEC put up stock in some of its subsidiaries as collateral.

The new loans, which will mature Dec. 31, 1990, will bear interest at 1.75% above the prime rate.

The agreement also requires NEC to raise a minimum of $10 million in additional capital by April 30.

The company said it will actually try to raise an additional $15 million to pay back part of the loans, as well as establish something akin to an emergency fund.

NEC, the nation’s largest provider of vocational and educational training services, said it would raise the money through a private debt or stock offering, or by having its subsidiaries take out loans.

The company’s stock--which has plunged more than 50% in the last six months--closed down 25 cents to $6.25, very near its 52-week low of $5.75.

The company has lost $8 million dollars in the last six months largely because of problems at its Applied Learning division, which sells educational materials and services to corporations.

Early this month, Chairman David C. Jones and President Jerome Cwiertnia told stockholders they intend to reduce costs at Applied Learning by at least $20 million over the next year.

About 140 employees at Applied Learning have been laid off, along with 18 middle managers and support personnel at corporate headquarters in Irvine.

NEC now says it has problems at Applied Learning under control.

Customers of the Naperville, Ill.-based subsidiary were being overbilled, undercharged or given services completely free, company officials said.

Those snags developed after three separate companies were merged to create Applied Learning.

Former chairman and chief executive H. David Bright was ousted from NEC in July, partly because of the snafus at Applied Learning.

But there are other problems, including declining enrollments at the company’s vocational schools, where a 10% drop in attendance has been partially offset by a hike in tuition.

Three months after Bright’s departure, a New York investor filed a class-action lawsuit against NEC and its top executives charging they misled investors during the summer as to the company’s financial condition.

The suit alleges that NEC tried to hide the problems at Applied Learning and made falsely optimistic statements about the company’s condition in order to inflate its stock price.

It is the second time this year NEC has been hit with such a lawsuit.

The company has said it will vigorously defend itself against the investor’s allegations.