What's it like to be the king of sleazy self-serving scare tactic predatory messages?
First I congratulate you on getting out at the first huge sign of bad news. You pared your losses and were willing to see things for what they are. Second, I can't agree with you more in these comments. You are absolutely seeing things for exactly what they are.
And unfortunately, management got to dupe way too many students and way to many investors along the way. There was a lack of transparency and purposeful deception at every step.
To your 10% chance, I have 20%, but even with my 20%, I see limited upside, as the ED is calling the shots, and they are gonna make sure everyone is paid, including the States AG, long before shareholders get a dime. So even if by miracle, there are significant asset sales, the result will not be good for shareholders.
Anyway, I applaud you for your being smart and avoiding further losses. Good job!
Who was the idiot who said COCO was likely to fall Monday? Oh, I guess that was me. What was I thinking?
Hoto: How is it that so many posters are incorrectly thinking that Corinthian will have a life after the sale or closure of ALL schools as publicly announced? Is this also why they perceive that there is some value that will remain?
Here is exactly why:
The only new news is that 1) DE took over COCO completely, and 2) DE established at least a $30M fund, and 3) DE put in place a "mechanism" for funding that will be used in the future, and 4) COCO will try to sell 87 schools.
4. Selling schools? That was old news. Is the number positive? Yes. COCO has been trying to sell schools since at least the time of exploring strategic options if not before. NOt a single campus has sold. We learned the attempt number, 87. If they sell a) they have to sell for a meaningful price b) a deal has to be made with other parties on the liabilities, c) DE must approve, d) there must be residual funds after student needs, taxpayer repayments, liabilities are dealt with, and e) DE must allow some of the residual funds to be paid out to shareholders.
1. DE Takeover. Is that positive news? No. That sealed the deal in two ways. First COCO is going out of business in 6 months as a result, second, DE is managing the dissolution of COCO for students and taxpayers benefit (that can be very expensive!), and seems committed to use all available funds for exactly those purposes and nothing more.
2. $30M+ Fund. Is that positive news? I don't think so. COCO has $100M in net tangible assets (i.e. physical things you can actually sell) on its books. If you subtract the $60M in software and $30M+ fund, that leaves $10M. They own 4 buildings with a book value of $200M, the rest are all leased, and they have another $200M in probably now worthless leasehold improvements. If you consider the $200M a wash then you get -$190M in net tangible equity. The $30M just made the negative number $20% worse.
3. Mechanism. Is that positive? Only to avoid BK temporarily. So no it is not for shareholders. The mechanism insures that COCO will get only life support level funds at most for 6 months but with huge strings attached.
Not an assumption. Please read the statements made by DE. They explicitly say repeatedly that their role is to protect and serve the interests of students and taxpayers.
ED will make sure that all funds are used for those purposes. They state that at least $30M will be allocated to a fund. So it could be more. And there could be other funds like one to cover lifetime placement as guaranteed to all Heald graduates, etc. ED will want to satisfy the 20+ AG claims, settle class action and individual lawsuits generously and fairly to the claimants. And as former students see and ED advertises monetary relief to victims, just like with the BP oil spill, the victims will come out en masse to take whatever little share they can. There will be so many legitimate claims against COCO assets, ED won't even know how to manage it.
And is the $60M in computer software on COCO's balance going to even get $6M? They have $100M (rounding up) in tangible assets before the pending $30M+ charge. For the people counting full book value at $5.50, remember that $400M of that value is in worthless intangibles and goodwill. If COCO had had valuable assets, they would have sold them so they did not have to make this deal with this devil. They saw this coming for months, all the way back to January.
DE's takeover effectively ended all possibilities for shareholders to get any funds when COCO goes out of business. The only question is whether investors will understand this. The situation seems to easy and obvious to fool anyone, but investors have been stupid before.
If enough investors fool themselves, then the greater fool theory will apply, and you may have a chance to get something before the stock you own is worth the same as toilet paper.
Hesha: :...would you short it then like you successfully did when the DOE preliminary deal was announced?"
Yes. I will short COCO on any upward spike putting COCO into the 30 cent range. That said, I have to worry about COCO being delisted and the inherent lack of liquidity. Even at virtual zero, can I trade it to close my position and recoup my funds or do I have to wait years for a final outcome?
That said, DE's takeover eliminates any possibility COCO shareholders will walk away with anything. I expect the stock to hit 15 cents on Monday as investors see the situation for what it is.
Before the takeover, COCO had a possibility to sell assets and retain and distribute any residual money to shareholders. Now that DE is running the company, they have no intention to retain, nor distribute any residual money to shareholders. Any residual funds will be used exclusively for the benefit of students and taxpayers.
Ted Mitchell, the undersecretary at the Education Department, said the agreement will “protect students’ futures and fulfill the Department’s responsibilities to taxpayers moving forward.”
“Ensuring that Corinthian students are served well remains our first and most important priority, and we will continue to work with Corinthian officials and the independent monitor on behalf of the best interests of students and taxpayers,” Mitchell said.
Under the terms of the agreement, the campuses will inform students of their options and each campus will have a plan that allows students to complete their program, if they choose to do so. The company has agreed to only use federal aid funds for daily operations and will hire an independent monitor. Under a number of circumstances, students will be eligible for a refund paid for using a reserve fund of at least $30 million from Corinthian’s funds.
Per Jack: "ED has also provided for an immediate drawdown of Title IV funds for currently enrolled students" Translation: If they want financial aid, ED suggests they transfer to another school. "A mechanism for continued funding during the transition of our schools to qualified buyers" A "mechanism"= JUST enough money to pay your creditors and utilities and skeleton staff. I expect a VERY large layoff announced next week.
"We have fully complied with all of ED demands" -Jack
Read there was no negotiation.
No. I did fall off my chair!
The U.S. Department of Education today awarded $110M to Corinthian College, Inc. In Santa Ana, California, to help restore normal operations related to the recent 21 day delay. The immediate $110M grant, which is being made through the Department's School Emergency Response Fund (SERF) program and administered by the Office of Safe and Healthy Students, will provide support to students and faculty at Everest Colleges, Everest Institute, as well as the Heald and Wyotech impacted by the delay in funding. "While we can't take away the pain that tragic incidents have caused the school and community, we can provide support to the students, faculty and community who were impacted and continue to feel the loss," U.S. Secretary of Education Ar
or seen another way. Every time BP stock fall by 1/8, $100M in shareholder equity is lost. COCO's current market cap (i.e. equity) is $25M. Every 1/8 change in BP is 4 times COCO's entire market value/shareholder equity.
Do you hear shareholders crying when BP loses 1/8. That's the bid/ask spread. Who cares?
And don't just take it from me. Here is an employee comment from today:
"Nothing Personal, But:
Employees still defending this company and blaming others for its current plight are completely delusional. CCi had to respond with the placement data in January. They didn’t. Why? They have the information. The company has people reporting and checking this data ad nauseam throughout the company. Here’s why: They knew the data was overstated and outright wrong. The Dept. of Ed and the state of CA have an email FROM JACK stating the data is wrong and they have a compliance issue. It is common knowledge that the company uses predatory practices to target, enroll and take advantage of the most unfortunately vulnerable segment of society as students. If you work here, you have seen it & heard it. Now they are enrolling students without disclosing their impending doom - Despicable. CCi charges astronomical tuition for an education with very little value. The company’s graduation rate is unacceptably low. The company’s default rate is ridiculously high. Their key stats and reputation are the worst in the industry even with fudged numbers. CCi should have cleaned up their act a long time ago. They didn’t. Too late now. WAKE UP if you don’t know this or are ignoring these facts. Oh, and you work for an “education” company, use spell check."
Stop playing the victim. And if you want to write somebody, write COCO management. They are the ones that did illegal things, they are the ones that took 5 months and counting to turn in an assignment that was supposed to be done, they are the ones who played every game, got 18 States and 4 consumer protection agencies into the mix by ignoring and/or blatantly violating the rules.
As the ax murderer is arrested while fleeing the crime scene, you want to blame the police because that person owes you money?
Are you serious? Seriously deranged?
Quick KoolAid: I agree with you. But why overpay. Let's buy it out at 26 cents or better yet, let's agree to take it over for zero in BK with DE taking on the liabilities in exchange.
Unfortunately, for taxpayers, COCO may be worth less than zero because of the massive liabilities.
But it is still a good idea, that will never work.
That's what COCO has been telling ED for 5 months and counting.
That's what COCO has been telling shareholders about making a deal to sale campuses.
Lookout shareholders. Don't be surprised at all to hear, "My dog ate your money."
Bottom line: Invest in a scam, get scammed.
Here is what an employee wrote:
NEWS FLASH From the CCi Web Site...
"We serve our students and operate our schools in keeping with our core values, including integrity, service, excellence and accountability." BAHHH HA HA HA HA!!!!!! (That's the sound of me laughing so hard I can't catch my breath.) Oh, #$%$, hyperventilating. Easy tiger, breath, breath. BAHHHHHH HA HA HA HA HA HA!!!!!!!
Accountability? Does that include not keeping student records as legally required, then not producing them as legally required after 5 months of demands, then putting 100 people to work on producing the 5 month old document demand, then still being late on the new deadline and still to this day not satisfying the requirement? And does that include running out of money to the point that the Company had less than one weeks cashflow? And does that include the fact that the Company had only one critical deadline of July 1 to make a deal or face dire cashflow and negative PR consequences, and it missed it?
Accountability? Only for the Keystone Cops of Education. These guys put themselves out of business with no help other than their own incompetence and blatant disregard for the rules.