(Adds details, background)
June 23 Corinthian Colleges Inc said it
would receive $16 million in federal aid from the U.S.
Department of Education that would prevent the for-profit
education provider from a cash shortfall.
The agreement with the Department of Education will allow
Corinthian to keep running its schools, while the college
operator seeks buyers for most of its campuses in the next six
Corinthian's shares were trading 26 percent higher at 42
cents on Monday afternoon.
Corinthian, which operates 107 campuses and runs online
courses, said it would finalize a more detailed transition plan
with the Department.
The company said it would be allowed to determine which
schools it would sell, and how many it would wind down.
Corinthian has been exploring strategic options and seeking
alternative sources of capital since it breached some debt
covenants earlier this year.
Santa Ana, California-based Corinthian said last week its
ability to continue to be in business was in jeopardy after the
U.S. Department of Education extended the waiting period to draw
down federal student aid funds.
The warning sent Corinthian's stock down more than 60
Increased regulation has added to the woes of for-profit
education companies such as Apollo Education Group and
Strayer Education Inc, which have struggled to attract
students since a 2010 government crackdown revealed high student
debt loads, low graduation rates and poor employability of
(Reporting by Mridhula Raghavan in Bangalore; Editing by Ted
Kerr and Saumyadeb Chakrabarty)