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Published in Print: June 9, 2004, as Multimillionaire Buys Major Charter School Manager

Multimillionaire Buys Major Charter School Manager

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A new education management company, led by the former head of a global electric company, has acquired Chancellor Beacon Academies, the nation’s second-largest for-profit manager of charter schools.

Imagine Schools Inc., based in Arlington, Va., concluded its acquisition of Coconut Grove, Fla.-based Chancellor Beacon for an undisclosed amount last week. With that deal, Imagine Schools now manages more than 70 charter schools, serving almost 20,000 students, in nine states and the District of Columbia. Edison Schools Inc., of New York City, is the largest for-profit manager of the publicly financed but largely independent schools.

Chancellor Beacon was a good fit for Imagine Schools, said Dennis Bakke, Imagine’s chief executive officer. Mr. Bakke is also the co-founder and chief executive officer emeritus of Arlington, Va.-based AES Corp., a power company that distributes electricity in 27 countries.

Mr. Bakke founded Imagine Schools in January with his wife, Eileen, an educator and a vice president of the company.

"We aspire to live by the shared values of integrity, justice, and the creation of fun school environments," Mr. Bakke said in a statement about the acquisition.

Chancellor Beacon had appeared to be ripe for a takeover. Like some other charter school managers, it had struggled financially. Low student enrollment, high start-up costs, and legislative cuts to district funds had hurt the company, according to a Chancellor Beacon official.

Some schools and school foundations in Florida, for example, owed Chancellor Beacon almost $3 million, and the Philadelphia school district ended its $2.9 million, five-year contract with the company last year. Chancellor Beacon officials refused to disclose the total amount of debt the company has incurred.

"We’ve had a lot of success and also a lot of bumps along the way," said Octavio Visiedo, the former CEO of Chancellor Beacon and now Imagine Schools’ chief adviser and board chairman.

"We’re in a business that’s capital-intensive, and frankly, Dennis … is willing to commit a lot of capital to grow this company," said Mr. Visiedo, who is also a former superintendent of the Miami-Dade County schools.

Deep Pockets

Imagine Schools does appear to have deep pockets.

Mr. Bakke was once No. 312 on Forbes magazine’s "world’s richest people" list, and the Bakkes are significant shareholders of AES Corp.

The couple will initially invest $100 million in their new company. They plan to spend another $40 million to build and open several charter schools in the District of Columbia, they said, as well as two charter schools in Baltimore in the fall of 2005.

The Bakkes will also pledge an additional $20 million to open charter schools in South Carolina, they said, if the state legislature adopts a bill creating a statewide charter district.

Vol. 23, Issue 39, Page 5

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