* Co breaches debt covenants, seeking waiver from lenders
* Board hires Barclays to explore strategic options
* Sees fourth-quarter enrollment down 16-18 pct
(Adds CEO comment, background, detail about investment firm;
By Rohit T. K.
May 6 Corinthian Colleges Inc said it
has breached debt covenants due to $76.5 million in charges, and
said it had hired Barclays Plc to explore strategic options.
Corinthian shares fell as much as 13 percent to an all-time
low of $1.04 after the company reported weak results and said it
would seek a waiver from lenders for the covenant breach.
"Everything is on the table. We are instructing Barclays to
explore all the options that will increase shareholder value, as
well as seeking alternative sources of capital," Corinthian
Chief Executive Jack Massimino said on a post-earnings
U.S. for-profit colleges have been hurt by a spiral of
falling enrollments, campus closures and lower fees. They also
face regulatory pressure over high drop-out rates.
Corinthian's business practices are being investigated by 16
attorneys general across the United States, Massimino said.
The company faces potential legal action from U.S. consumer
regulators over issues related to student loans.
Corinthian also faces a suit filed by the state of
California, accusing it of misrepresenting job placement rates
to its students and investors.
Competitors Apollo Education Group Inc and Career
Education Corp are also under investigation by the U.S.
government over their business practices.
Career Education sold its European business for $305 million
in October while Apollo has shut about 25 campuses and closed
half of its flagship University of Phoenix learning
For the third-quarter ended March 31, Corinthian reported
earnings of 3 cents per share from continuing operations,
missing the average analysts' estimate of 5 cents, according to
Thomson Reuters I/B/E/S.
Corinthian breached debt covenants as its lack of profits
forced it to write off $76.5 million in deferred tax credits.
New student enrollments fell 13 percent to 22,853. The
company said it expects the decline in enrollments to accelerate
to a fall of 16-18 percent in the current quarter.
California-based Corinthian's shares closed down 9 percent
at $1.08 on the Nasdaq on Tuesday. They have fallen about 40
percent so far this year.
(Reporting by Rohit T. K. in Bangalore; Editing by Simon
Jennings and Joyjeet Das)