Summit Partners Selling Heald College

Corinthian Colleges Inc. (Nasdaq: COCO) has agreed to buy career college operator Heald College for $395 million in cash. Heald is minority-owned by Summit Partners, and operates nine campuses in Northern California, Hawaii and Oregon.

PRESS RELEASE

Corinthian Colleges, Inc. (Nasdaq: COCO) has signed a definitive agreement to acquire Heald Capital LLC, the parent company of Heald College. Heald is a regionally accredited institution that has been delivering quality career-focused academic programs since 1863 and has created a strong brand in its markets. Heald prepares students for careers in healthcare, business, legal, information technology and other growing fields, primarily through associate degree programs. Headquartered in San Francisco, California, Heald operates 11 campuses and had approximately 12,300 students at September 30, 2009.

Heald has nine campuses in Northern California, one campus in Honolulu, Hawaii and one campus in Portland, Oregon. In addition, Heald recently received approval from its accreditation agency, The Accrediting Commission for Community and Junior Colleges of the Western Association of Schools and Colleges, to offer fully online degrees. The College expects to begin enrolling exclusively online students in early 2010. Corinthian currently has five nationally accredited schools in Northern California which primarily offer short-term diploma programs in healthcare, automotive technology and the trades.

“The acquisition of Heald is consistent with Corinthian’s strategy of increasing its presence in markets with high growth potential and expanding its ability to offer regionally accredited programs,” said Peter Waller, Corinthian’s chief executive officer. “Upon completion, the Heald acquisition will give Corinthian an increased presence in Northern California, Oregon and Hawaii; a growth platform for campus-based and online regionally accredited programs; and a third strong brand. In addition, both organizations are dedicated to the mission of changing students’ lives through quality, career-oriented education. We look forward to welcoming Heald’s chief executive Nolan Miura and his capable team as a new and separate division at Corinthian.”

“We fully support this proposed transaction, as Corinthian and Heald are both committed to preparing students for academic, personal and professional success,” said Nolan Miura, Heald’s president and chief executive officer. “I am proud of the strong culture and team that we have built at Heald and believe that our passion for student achievement has fueled the institution’s substantial progress over the past few years. We believe the transaction will allow us to build on past success by giving Heald access to greater resources and through the sharing of best practices. Having spent eight years at Corinthian as a senior executive, I know personally that both organizations strive to put students first and to provide a positive culture for faculty and staff. We look forward to joining Corinthian and to the opportunities it will create for Heald.”

Heald Capital’s controlling shareholder is Brad Palmer, Founder and Managing Partner of Palm Ventures, LLC, who organized Heald Capital to acquire the majority interest in Heald College in 2007. Mr. Palmer recruited the current Heald Trustee Board, which includes a number of nationally recognized education and business leaders, and he has worked cooperatively with Mr. Miura and management to provide the resources essential for the development of the college. In March 2009, Mr. Palmer sold a minority equity interest in Heald to funds affiliated with Summit Partners.

Transaction Terms

Under the terms of the definitive agreement, Corinthian will pay the purchase price of $395 million in cash at closing in exchange for all outstanding membership interests of Heald Capital LLC, the parent company of Heald College, subject to certain working capital items. The purchase price also includes the repayment or assumption of Heald’s debt and other closing payments.

By virtue of Heald’s limited liability ownership structure, Corinthian will receive a tax “step up” in the assets of Heald Capital LLC and its subsidiaries that is expected to provide substantial future tax benefits to Corinthian. Assuming a discount rate of 8% and an effective tax rate of 40%, these benefits have a net present value to Corinthian of approximately $70 million, implying an effective net purchase price of $325 million, or 8.4 times Heald’s projected fiscal 2009 adjusted EBITDA.

Corinthian plans to finance the acquisition through a combination of cash and debt, using its recently announced $280 million credit facility and available cash. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the third quarter ended March 31, 2010.

BofA Merrill Lynch acted as financial advisor to Corinthian, and O’Melveny & Myers LLP served as Corinthian’s legal counsel. Kirkland & Ellis served as legal counsel to Heald and to the sellers.

Financial Impact

Heald is expected to generate revenues of approximately $180 – $185 million and adjusted EBITDA of approximately $38.5 million for the fiscal year ending December 31, 2009. Heald’s student population is expected to grow by approximately 30% in its fiscal year ending December 31, 2009, compared to its fiscal year ended December 31, 2008.

Excluding transaction-related expenses, we expect the acquisition to be slightly accretive to earnings in the second half of fiscal 2010, and to add approximately $0.15 – $0.20 to diluted earnings per share in fiscal 2011. These projections are based upon preliminary estimates of the allocation of purchase price intangible assets. The final allocation will be determined after closing.

Conference Call Today

We will host a conference call today at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time), for the purpose of discussing the definitive agreement with Heald. The call will be open to all interested investors by dialing (866) 383-8009 (domestic) or (617) 597-5342, pass code 61656578 or through a live audio web cast at www.cci.edu (Investor Relations/Webcasts & Presentations) and www.streetevents.com. The call will be archived on www.cci.edu after the call. A telephonic playback of the conference call will also be available through 5:00 p.m. ET, Tuesday, October 27, 2009. To hear the replay, dial (888) 286-8010 (domestic) or (617) 801-6888 (international), pass code 96241011.

About Corinthian Colleges

Corinthian Colleges is one of the largest post-secondary education companies in North America, with annual revenues of $1.3 billion and a student population of over 86,000 students. The company’s mission is to prepare students for careers in demand or for advancement in their chosen field. Corinthian offers diploma programs and associate, bachelor, and master’s degrees in a variety of high-demand occupational areas, including healthcare, business, criminal justice, transportation technology and maintenance, construction trades and information technology. More information can be found on Corinthian’s website at www.cci.edu.

About Heald

Founded in 1863, Heald is a regionally accredited private career college with 11 campuses located in Northern California; Portland, Oregon; and Honolulu, Hawaii. Heald offers Associate in Applied Science degrees, Associate of Arts degrees, diplomas and certificates in healthcare, business, legal, information technology and other growing fields.

About Palm Ventures

Palm Ventures (www.palmventures.com), based in Greenwich, CT, was founded by Brad Palmer and is focused on investing Palmer family capital in companies which have a positive and transformative impact on society. Current industry focus is in education, health care, human resources, business services, financial services and renewable energy. Palm Ventures takes a strong value-added approach to the development of its portfolio companies, leveraging a broad network of strategic investors, retired executives and operating professionals who provide strategic advice and oversight to companies and management. In addition to Heald, Palm Ventures has made investments in six other successful education companies.

About Summit Partners

Summit Partners (www.summitpartners.com) is a growth equity investor that provides private equity and venture capital to rapidly growing companies. Founded in 1984, Summit has raised more than $11 billion in capital and has provided growth equity, recapitalization and management buyout financing to more than 300 growing companies across a range of industries and geographies. Summit Partners seeks outstanding management teams that have self-financed their companies to profitability and market leadership.