Edison: More Schools in Fall, Investors in Wings

By Mark Walsh — May 29, 2002 3 min read
  • Save to favorites
  • Print

Executives of Edison Schools Inc. said last week that they were in serious discussions with at least five potential investors to provide the $30 million to $50 million the company needs to take control of schools in Philadelphia and elsewhere in the fall.

The New York City-based school management company has faced one setback after another in recent weeks, including a sharply declining stock price and the disclosure of a federal Securities and Exchange Commission inquiry into its books. (“Edison Reels Amid Flurry of Bad News,” May 22, 2002.) But last week, the company sought to promote confidence by announcing expansion plans for next fall, and by discussing what officials said was increased interest in the company by potential capital investors.

“We’re now engaged in discussions with five investors in a serious way,” Christopher Whittle, Edison’s president and chief executive officer, said during a May 23 news conference that was also aired on the World Wide Web.

The company says it needs as much as $50 million for expansion this coming fall, much of it for the 20 Philadelphia schools Edison is slated to manage. Edison announced last week that it would take over a public school in Indianapolis and open a new charter school in Kansas City, Mo., in the fall. It will also expand operations at 12 of its current sites by, for example, adding a grade or two.

Edison manages 133 schools serving 74,000 students this school year. Next year, it expects to add 14,000 students in the 20 Philadelphia schools and about 2,750 in the expanded sites and the two new schools. But it will lose about 5,000 students from contracts not being renewed, leaving a net gain next year of just under 12,000 students.

Edison had raised expectations on Wall Street that it could be awarded as many as 45 schools in Philadelphia, and the recent announcement of the smaller number precipitated the steep dive in the company’s stock price. The stock closed at $1.39 on May 23 after trading as low as $1.18 last week. Its 52-week high is $28 and it traded around $21 a share in January.

Mr. Whittle took pains last week to suggest that the company needs new capital to expand every fall, and that there seemed to be plenty of interest among big investors in giving Edison what it needs this year. However, while he would not disclose who the potential investors are, Mr. Whittle acknowledged that this round of investment would come at a price to the company and its stockholders. New loan debt would be at steep interest rates, he said, and new equity investment would dilute the value of current shares.

“Do we need the financing to open new schools? Yes,” Mr. Whittle said. “We are highly confident we will get it done. But will it be costly? Yes.”

Philadelphia Story

In another development, there was renewed discussion last week that Edison might win further business in Philadelphia.

The Philadelphia Inquirer reported the details of a memo from Mr. Whittle to one of Edison’s key supporters on the five-member School Reform Commission, the state- and city- appointed panel that now controls Philadelphia’s public schools. The memo outlines a plan for the company to install its educational program in an additional 19 schools.

Under the plan, Edison would not have the same control over those 19 “reconstituted” schools as over the 20 it will manage outright. Instead, the company would install its curriculum and school design and would receive per-pupil fees from the reform commission.

It was uncertain late last week whether there was enough support on the commission for giving Edison the extra 19 schools. Mr. Whittle said the company would be willing to take on the additional business, although such a move could push its capital requirements for next year as high as $60 million.

A version of this article appeared in the May 29, 2002 edition of Education Week as Edison: More Schools in Fall, Investors in Wings


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Student Well-Being Webinar
A Whole Child Approach to Supporting Positive Student Behavior 
To improve student behavior, it’s important to look at the root causes. Social-emotional learning may play a preventative role.

A whole child approach can proactively support positive student behaviors.

Join this webinar to learn how.
Content provided by Panorama
Recruitment & Retention Live Online Discussion A Seat at the Table: Why Retaining Education Leaders of Color Is Key for Student Success
Today, in the United States roughly 53 percent of our public school students are young people of color, while approximately 80 percent of the educators who lead their classrooms, schools, and districts are white. Racial
Jobs January 2022 Virtual Career Fair for Teachers and K-12 Staff
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Briefly Stated: January 12, 2022
Here's a look at some recent Education Week articles you may have missed.
8 min read
Education School Bus Driver Retires After 48 Years Behind Wheel
Charles City school bus driver Betty Flick sat behind the wheel for the final time last week, wrapping up a 48-year career for the district.
3 min read
Charles City school bus driver Betty Flick poses with one of her farewell signs. Flick has been driving for Charles City School District for 48 years.
Betty Flick quickly fell in love with the job and with the kids, which is what has had her stay in the district for this long.
Courtesy of Abby Koch/Globe Gazette
Education Briefly Stated: December 1, 2021
Here's a look at some recent Education Week articles you may have missed.
9 min read
Education Briefly Stated: November 17, 2021
Here's a look at some recent Education Week articles you may have missed.
8 min read