Corinthian Colleges, U.S. Department of Education Sign Operating Agreement
04 Juillet 2014 - 5:50AM
Corinthian Colleges, Inc. (Nasdaq:COCO) announced today that it has
signed an operating agreement with the U.S. Department of Education
that establishes an orderly transition plan for its 107 campuses
and online programs, and allows its students to complete their
educational programs. ED has also provided for an immediate
drawdown of Title IV (student financial aid) funds for currently
enrolled students and a mechanism for continued funding while the
agreement is in place.
The operating agreement is consistent with the Memorandum of
Understanding announced by the Department and Corinthian on June
23, 2014. Under the terms of the agreement, Corinthian will put 85
of its U.S. schools up for sale, and "teach out" (gradually wind
down) operations at 12 other schools. Corinthian agreed to work
toward signing definitive agreements for campus sales in
approximately six months. Separately, the Company will also begin a
sales process for its Canadian schools.
ED will also appoint an independent compliance and business
Monitor who will serve as the primary liaison between Corinthian
and ED. Corinthian has agreed to suspend enrollment of new students
until July 8, 2014, when ED and Corinthian plan to have the Monitor
in place.
"We are pleased to have reached an agreement with ED that helps
protect the interests of our students, employees and other
stakeholders," said Jack Massimino, Corinthian Chairman and Chief
Executive Officer. "This agreement allows our students to continue
their education and helps minimize the personal and financial
issues that affect our 12,000 employees and their families. It also
provides a blueprint for allowing most of our campuses to continue
serving their students and communities under new ownership."
Under the terms of the operating agreement:
- The Monitor will have full access to Corinthian's personnel and
financial and operational information, and his or her duties will
include monitoring of on-going Title IV disbursements, campus sales
and teach-outs, company expenditures, and document production
related to ED's requests for information. ED expects to name the
Monitor as soon as possible.
- Corinthian will remain under ED's Heightened Cash Monitoring 1
(HCM1) oversight, which includes a 21-day hold on federal Title IV
financial aid funds. To prevent the disruption of school
operations, ED will immediately allow Corinthian to draw funding
advances against the 21-day hold, subject to conditions set forth
in an amendment to the Memorandum of Understanding originally
signed on June 22, 2014. After the Monitor is in place, he or she
will review the Company's on-going Title IV
disbursements.
- Corinthian has agreed that it will complete its response to a
request by ED for documents related to 175,000 of its graduates by
July 15.
- Corinthian will provide written notices to all students
regarding its plans for their respective campuses or online
programs.
Corinthian expects to provide additional information regarding
the operating agreement and the amendment to the Memorandum of
Understanding in a Form 8-K filing with the Securities and Exchange
Commission on Monday, July 7, 2014.
"I especially want to thank publicly our 12,000 employees who
have risen to the occasion during the difficult circumstances of
these past few weeks," Massimino added. "They have worked around
the clock to continue serving our students and to help make
possible this orderly path forward."
Background
On June 19, 2014, Corinthian reported that ED had implemented
HCM 1 financial oversight and imposed a 21-day delay in Title IV
funds disbursement. On June 22, 2014, Corinthian signed a
Memorandum of Understanding with the Department, under which the
Department would immediately provide Corinthian with the funding
required to avert a sudden disruption of school operations.
In return, Corinthian agreed to develop a plan for the orderly
transition of its campuses and an operating agreement that would
govern its daily operations while the transition is under way. That
plan and operating agreement are now complete.
About Corinthian
Corinthian is one of the largest post-secondary education
companies in North America. Our mission is to change students'
lives. We offer diploma and degree programs that prepare students
for careers in demand or for advancement in their chosen fields.
Our program areas include health care, business, criminal justice,
transportation technology and maintenance, construction trades and
information technology. We have 107 Everest, Heald and WyoTech
campuses, and also offer degrees online. For more information, go
to http://www.cci.edu.
Safe Harbor
Certain statements in this press release may be deemed to be
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. The company intends that all such statements be
subject to the "safe-harbor" provisions of that Act. Such
statements include, but are not limited to, those regarding the
implementation of the Operating Agreement and transition plan. Many
factors may cause Corinthian's actual results to differ materially
from those discussed in any such forward-looking statements or
elsewhere, including: Corinthian's ability to identify new owners
for its campuses and to enter into agreements with any such new
owners on terms acceptable to the company, if at all; the potential
for further action by ED to limit Corinthian's ability to receive
regular disbursements of Title IV to fund its operations; possible
inability to obtain needed liquidity through new financings,
additional cost reductions, accelerated asset sales or some
combination thereof; the company's possible inability to comply
with the terms of the Operating Agreement; the company's
effectiveness in its regulatory and accreditation compliance
efforts; the outcome of ongoing reviews and inquiries by
accrediting, state and federal agencies, including the Department
of Education, various attorneys general, and the Consumer Financial
Protection Bureau (CFPB); the outcome of pending litigation against
the company, including the civil complaints filed by the California
and Massachusetts Attorneys General; the CFPB's determination
regarding enforcement action against Corinthian; increased
competition; changes in general macroeconomic and market conditions
(including credit and labor market conditions, the unemployment
rate, and the rates of change of each such item); the uncertainty
of counterparty decisions in the waiver of events of default in the
credit agreement and the potential sale of Genesis loans; and the
other risks and uncertainties described in the company's filings
with the U.S. Securities and Exchange Commission. The historical
results achieved by the company are not necessarily indicative of
its future prospects. The company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
CONTACT: Investors:
Anna Marie Dunlap
SVP Investor Relations
714-424-2678
Media:
Kent Jenkins Jr.
VP Public Affairs Communications
(202) 682-9494
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