K12 Prices IPO

NEW YORK (AP) – K12 Inc. shares will begin trading Thursday after the technology-based education company's initial public offering of 6 million common shares priced at $18 each, the high end of the anticipated price range.


According to Securities and Exchange Commission filings, the Herndon, Va.-based company expected the IPO to price between $16 and $18 per share.


K12 offered 4.45 million of the shares, and a group of selling stockholders sold the other 1.55 million shares.


Based on the $18 offering price, K12 will have a total market capitalization of $490.6 million.


The company raised about $80.1 million from its portion of the offering, before expenses and commissions. K12 plans to use the proceeds, along with about $14.9 million from a stock subscription agreement, for general corporate purposes, including working capital, capital expenditures and the development of new courses and products. The company will also use proceeds to repay debt, pay a cash dividend to holders of its Series C preferred stock and for possible acquisitions, according to filings.


K12 offers proprietary curriculum, software and educational services for online delivery to students in kindergarten through 12th grade, primarily through virtual public schools. The company provides full education services to 25 virtual public schools and limited management services to seven virtual public schools in 17 states and the District of Columbia. Furthermore, parents can buy K12's curriculum and online learning tools to facilitate or supplement their children's education.


For the three months ended Sept. 30, the company reported income of $4.6 million, compared with a loss of $2.2 million in the year-ago period. Revenue for the quarter rose to $59.4 million from $37.7 million.


Chief Executive Ronald J. Packard founded the company in 2000. Packard previously served as CEO of Knowledge Schools, a provider of early childhood education and after-school companies. Packard also previously held positions at McKinsey & Co. and Goldman Sachs.


Morgan Stanley and Credit Suisse, served as joint book runners for the offering. The underwriters have been given the option to buy up to 900,000 additional shares from the selling stockholders to cover any overallotments.


K12 shares will trade on NYSE Arca under the symbol “LRN.”

peHUB note: K12 had raised around $45 million in VC funding, from firms like Constellation Ventures. www.k12.com