Edison Project Plans IPO

Published September 1, 1999

Edison Schools, Inc., the nation’s largest private operator of charter schools and standard public schools, announced plans in early August to raise up to $172.5 million through an initial public offering of stock.

The New York-based company, formed by media entrepreneur Christopher Whittle, expects to operate 77 schools in the 1999-2000 school year, serving approximately 37,000 students. In the 1998-1999 school year, Edison managed 51 schools with 24,000 students.

The expansion from 51 to 77 schools is being funded by $71 million in new private financing, including a $30 million investment by a venture capital firm run by Microsoft Corporation co-founder Paul G. Allen. For the nine months ended March 31, Edison reported a net loss of $20.7 million on revenues of $96 million, compared to a net loss of $16 million on revenues of $50.5 million for the previous nine months.

The company will offer stock options to its teachers and other employees, providing them with an added incentive to make the company prosper.

A few days after Edison’s announcement, ZapMe! Corporation announced a proposed public offering for its common stock, with part of the proceeds aimed at expanding the company’s operations in delivering educational resources to schools for free over the Internet. For each school participating in the ZapMe! network–which is designed primarily for students aged 13-19–the company provides free PCs, software, installation, and support as well as free “always-on” bi-directional satellite-delivered connectivity to the Internet.