Corinthian Sets First Stock Offering
Corinthian Colleges Inc., a Santa Ana-based operator of career-oriented colleges, is planning to sell 3 million shares to the public in a $51.8-million initial stock offering.
In a Securities and Exchange Commission filing Tuesday, the company said it plans to use the bulk of the money raised in the stock sale--which it estimates at about $40 million after expenses--to repay debt. After the offering, the current stockholders will own 71.8% of the total shares outstanding.
Corinthian has more than 14,000 students at 35 colleges in 16 states, including nine campuses in California. The schools focus on the “large and growing segment of the population seeking to acquire career-oriented education to become qualified and marketable in today’s increasingly demanding workplace environment,” the SEC filing states.
The company was founded in 1985 by David G. Moore, Paul St. Pierre, Frank McCord, Dennis Devereux and Lloyd Holland, all former executives of National Education Corp. It initially acquired 16 colleges from NEC that focus on health care. In 1996, Corinthian acquired 18 campuses from Phillips Colleges Inc., which emphasizes business education.
In the nine months ended March 31, Corinthian earned $899,000, compared to a year-earlier loss of $236,000. Its net revenue rose 45%, to $78.6 million from $54.3 million. As of March 31, the company had $31.6 million in long-term debt.
Among the risk factors listed in the prospectus for the stock offering are the company’s dependence on government financial aid programs for its students, a high degree of regulatory oversight and the possibility of large default rates on student loans.
Corinthian said it plans to continue growing through acquisitions, but currently has no purchase deals finalized. More debt or equity financing might be needed to pay for future acquisitions, it said.
The company also intends to open new schools, and may enter other education-related businesses such as distance learning.
The lead underwriters for the offering are Salomon Smith Barney and Credit Suisse First Boston.
Corinthian stock will trade on Nasdaq’s National Market under the ticker symbol COCO.
