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Dive briefs:
- Shareholders voted Tuesday to allow educational services provider Zovio to sell its assets and close. It signals a failed company attempt to pivot away from running the for-profit Ashford University, which had about 80,000 students a decade ago.
- Zovio received enough votes at a brief shareholder meeting to approve the plans it outlined in September. liquidate and dissolve the assets.
- The company’s management estimates that there will be up to $20.3 million left in cash to distribute to shareholders, but they warn that this indicates that nothing may be available after the company dissolves. Yes. This means shareholders can receive no dividend or up to 54 cents per share.
Dive Insight:
Tuesday’s shareholder vote marks the official end of one company’s attempt to transform itself from a for-profit university operator into a contractor that provides educational services to online universities. This can also be seen as an example of the limitations of converting a for-profit university into a non-profit institution. When to Increase Regulatory Scrutiny When Falling enrollment rates in higher education.
Zobio known as bridgepoint education Until 2019, it acquired TutorMe, an online tutoring service company, Coding Boot Camp Provider Fullstack Academyand in 2020 sold ashford collegeTo the University of Arizona, which had about 35,000 students at the time.
The public university renamed the institution the University of Arizona Global Campus (UAGC). It had planned to purchase services for its global campus, including marketing and recruitment, from its previous owner, his Zovio, under his 15-year contract.
Other commercial operators have successfully deployed such models.Most notably, Purdue University Acquisition of for-profit Kaplan University In 2017, it transformed it into Purdue University Global while maintaining the relationship with the institution’s previous owners under a service agreement.
But it didn’t pay off for Zovio. Enrollments at the UAGC have plummeted, and Zovio has had to cut costs in his 2021, according to a letter sent to shareholders before Tuesday’s vote.
“UAGC Service Contracts Remained Loss Contracts” the document said“We have begun considering strategic alternatives to deliver value to our shareholders, including the potential sale of three businesses.”
Company leaders have decided to sell or exit the remaining business units. They started with his TutorMe. sold for $55 million May. Zovio used some of the money to pay off a loan it took to pay a California court judgment. fine the company $22.4 million For misleading students enrolled at Ashford University.
Then this summer, UAGC has terminated the contract with Zobio. The university took his eight-year lease worth $20 million, hired nearly all educational services employees out of the company, and relieved Zovio of any obligations. In return, the company paid his UAGC his $10.5 million and was entitled to receive a $2.7 million security deposit.
Zovio estimates that its remaining business, Fullstack, will generate between $34 million and $55 million in sales.
At the end of August, Zovio posted $63.2 million in assets, nearly a third of which was goodwill or intangible assets such as brand names and reputations.
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