Edison founder to buy back stock

Mon, Jul 14, 2003 (10:57 a.m.)

SUN STAFF AND WIRE REPORTS

The founder of Edison Schools, the nation's largest for-profit manager of public schools, said today he will buy back the company from shareholders and take it private.

Wall Street's interest in New York City-based Edison has flagged since 2001, when investors intrigued by its promise to turn failing public schools into profit-making enterprises buoyed its stock price to close to $35.

With the stock at $1.56 at the markets' close last week, and few analysts pushing it anymore, Edison's founder and chief executive officer, Chris Whittle, said he would buy the schools firm for $174 million using a company that he owns and Liberty Partners, a private equity firm based in New York.

The deal calls for Edison stockholders to be paid $1.76 per share.

Edison is starting the third year of a five-year contract to manage seven Clark County School District campuses.

The company's switch from publicly traded to privately owned has little bearing for Clark County, Walt Rulffes, deputy superintendent of operations for the School District, said.

"Our interest is in their performance and compliance with the terms of their contract, not in their fiduciary structure," Rulffes said this morning.

Sharon Kaplan, principal of Ronnow Edison Elementary School in Las Vegas, said she and the company's other Clark County administrators were notified Thursday of Whittle's plans to buy back the stock. LaVerne White, regional vice president for Edison, assured the administrators that schools would not be adversely affected by the change, Kaplan said.

"For us, it's business as usual," Kaplan said of the year-round campus on Lean Street. "Supplies come when we order them, the curriculum is being carried out and children are learning."

The Edison model, which focuses on a rigid curriculum emphasizing reading skills and a longer school day, has been criticized as a "cookie cutter" approach. The company promises better resources for low-performing schools through donations from its corporate partners.

Last month a committee of School District officials and teachers recommended the Clark County School Board put off any plans to expand Edison's contract, noting that it was too early to tell whether the company's educational approach was making a difference.

School District officials have repeatedly said Edison schools must show gains on the next round of the Iowa Test of Basic Skills, given in October.

Last October's Iowa results have been established as the new baseline for performance. If Edison doesn't show gains, the district should re-evaluate its contract with the management company, Agustin Orci, deputy superintendent of instruction, said.

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