For-Profit For Sale?
Career College Central summary:
Corinthian Colleges signaled on Wednesday that it was open to merging or selling off all or part of its business. But the embattled for-profit chain faces a tough market, as well as looming regulatory and legal challenges. The company’s various holdings now enroll 75,000 students, according to a corporate filing it released this week. That’s down almost 14 percent from last year. Corinthian also reported a roughly 12 percent decline in revenue for the first three months of this year, with a net loss of $80 million.
Jack Massimino, Corinthian’s chairman and CEO, told investors that the company had slashed annual costs by $125 million — including layoffs of 1,350 employees — to try to adjust to slumping enrollment. And it recently closed or sold seven of its Everest College campuses. But while the cuts helped, Massimino said, the company is not out of the woods and expects future declines.
For example, Corinthian reported that is not in compliance with some of its bank debt covenants, and has sought waivers from certain lenders. The company also disclosed that it might be tripped up by a U.S. Department of Education financial responsibility test, which has caused Corinthian problems in the past.
“In light of current market and regulatory conditions, our board has authorized management to retain an investment banking firm to help the company explore strategic alternatives and enhance shareholder value,” Massimino said in a written statement.
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