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Published in Print: September 8, 1999, as Edison Project, Now Edison Schools Inc., Plans to Go Public

Edison Project, Now Edison Schools Inc., Plans to Go Public

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The Edison Project, the pioneering private manager of public schools, has filed for an initial public stock offering that will seek to raise as much as $172 million to finance the company's growth under its new name, Edison Schools Inc.

The name change took effect in filings last month with the federal Securities and Exchange Commission by the 8-year-old company started by the former media entrepreneur Christopher Whittle.

The New York City-based Edison this academic year is managing 77 public schools serving some 37,000 students nationwide, an increase from 51 schools and 24,000 students last year. It is the largest company in the nascent business of for-profit management of public schools and charter schools.

According to financial records in its registration statement with the SEC, Edison had a net loss of $49.5 million on revenues of $133 million in the fiscal year that ended June 30. In fiscal 1998, the company lost $22 million on revenues of $69 million.

Edison executives have said in the past that they hope to show a profit within a few years as they add schools and begin to realize economies of scale.

A Stake for Teachers

In its stock prospectus, which like most such documents is full of cautionary language, the company says: "We have not yet demonstrated that public schools can be profitably managed by private companies and we are not certain when we will become profitable, if at all."

Since its inception, Edison has raised some $232 million in private capital, most recently with a new round of financing in July that included a $30 million investment by Microsoft Corp. co-founder Paul G. Allen's Vulcan Ventures Inc.

Edison executives declined to comment on the stock offering, citing federal securities regulations that require a "quiet period" surrounding an initial public offering.

One reason Edison would eventually want to go public, besides raising capital, is its program offering stock options to teachers and other employees. The company announced the program last year, saying it would give educators a financial stake if the company became profitable.

Edison's public offering will be watched closely by observers of the growing education industry. "How Edison fares in this IPO will have a very strong bearing on the future course of the for-profit school business," said Thomas Toch, a guest scholar at the Brookings Institution who is writing a book about the company. "There's a lot of smart Wall Street talent that is betting on Edison."

The company has not set a date for its stock offering, but it is expected to occur this fall.

Vol. 19, Issue 1, Page 6

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