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8-K - 8-K - Stride, Inc. | w79307e8vk.htm |
EX-4.2 - EXHIBIT 4.2 - Stride, Inc. | w79307exv4w2.htm |
EX-4.1 - EXHIBIT 4.1 - Stride, Inc. | w79307exv4w1.htm |
EX-2.1 - EXHIBIT 2.1 - Stride, Inc. | w79307exv2w1.htm |
EX-3.1 - EXHIBIT 3.1 - Stride, Inc. | w79307exv3w1.htm |
For Immediate Release:
K12 Inc. Announces Acquisition of KC Distance Learning, Inc.
U.S. leader in online learning expands offerings for schools and families domestically and
internationally
internationally
Herndon, VA, July 26, 2010 K12 Inc. (NYSE: LRN), one of the nations largest providers of
proprietary curriculum and online school programs for students in kindergarten through high school,
announced today the all-stock acquisition of KC Distance Learning, Inc. (KCDL), a privately-held,
nationally-recognized provider of distance learning programs for middle and high school students,
with a newly-issued class of non-voting shares having a value of $63.1 million under the terms of
the Merger Agreement.
The acquisition bolsters K12s position as a leader in K-12 online education and a premier provider
of virtual school solutions. The move adds a new line of products and services to K12s robust
offerings for public and private schools, international schools, and individual consumers.
Additionally, K12® significantly increases the size of its online private school offering through
the acquisition of KCDL.
K12 is excited about the acquisition of KC Distance Learning and the opportunity to deliver a
greater variety of products and services to more customers, said Ron Packard, founder and CEO of
K12 Inc. By incorporating KCDLs offerings into K12s portfolio of high quality products and
services, we will be able to expand our online course and virtual school program offerings to
provide customers with more options and greater flexibility. This will also enable us to scale at
a faster rate to meet the exploding demand from families, teachers and administrators for online
learning solutions, while maintaining K12s high standards of quality and excellence. The
complementary nature of KCDLs businesses allows us to scale these new businesses and deliver the
products and services in a more cost efficient manner.
K12 is committed to our mission of delivering a world-class education to every child by empowering
families, teachers and school administrators with excellent education programs, said Mr. Packard.
K12 will continue to leverage our vast experience and expertise
on behalf of our customers and
passionately work to ensure that every child reaches his or her full potential.
KCDL, headquartered in Portland, OR, has three brands that provide quality education products and
services to districts, public and private schools, and directly to families: Aventa
LearningTM, The KeystoneTM School and iQ Academies®.
Aventa Learning offers an extensive catalog of engaging courses and effective instructional
services for schools and school districts designed to give educators innovative online content and
services to enhance their education programs. Aventa, which is accredited by the Northwest
Association of Accredited Schools, has over 140 core, elective and AP® courses in grades 6-12 that
provide organizations high quality and cost-effective online learning solutions, from credit
recovery courses to full-scale virtual school programs.
The Keystone School is a leading online private school for middle school and high school students.
The school, also accredited by the Northwest Association of Accredited Schools, was established in
1974 and has served over 250,000 students from 84 countries in its history. It provides a flexible
learning experience for full-time and part-time students and offers a wide range of courses
supported by experienced, certified teachers.
iQ Academies operates statewide online public schools in partnership with school districts or
public charter schools to serve the education needs of middle and high school students. iQ
Academies are offered in six states: Kansas, Minnesota, Nevada, Texas, Washington, and Wisconsin.
In fiscal year 2009 (FY 2009), KCDLs combined education channels delivered an estimated 176,000
course enrollments to 67,000 students in over 1,800 schools and organizations.
In joining forces, K12 and KCDL will provide students, families, and educators with even greater
access to high quality online education solutions, said Caprice Young, CEO of KCDL. It expands
our ability to support the highly customized solutions educators require to create hybrid learning
environments tailored to the individual needs of students.
Financial Highlights of the KC Distance Learning Acquisition:
The KC Distance Learning product offering augments K12s online learning offerings and will allow
the Company to reach and meet the needs of a broader group of students, teachers and school
administrators. The acquisition provides the opportunity to realize cost efficiencies and greater
revenues. As a result, the acquisition is expected to enhance the Companys growth over time.
Giving effect to certain transaction and transition related expenses, the transaction is expected
to be slightly dilutive on earnings per share in FY 2011 and accretive on earnings per share by FY
2012. K12 is on a June 30 Fiscal Year.
Unaudited Financial Results of KC Distance Learning:
The following financial results are unaudited. For the three months ending March 31, 2010, KCDL
reported revenues of $8.9 million, reflecting a growth rate of 23.0% over the same period in the
prior year. For calendar year 2009, KCDL reported revenues of $34.7 million, reflecting a growth
rate of 47.1% over the prior year.
The transaction closed on July 23, 2010. Further disclosures including audited calendar year
2009 financial statements and pro forma financial statements will be included in K12s future 8-K
filings with the SEC.
Terms of the KC Distance Learning Acquisition:
As consideration in the transaction, K12 issued a total of 2.75 million shares of a new series of
stock designated as the Series A Special Stock to the prior owner of KCDL, KCDL Holdings LLC, which
is an affiliate of Learning Group LLC. The holders of the Series A shares initially have no voting
rights and no rights of conversion. However, K12 has agreed to hold a meeting of stockholders to
obtain the approval of K12s stockholders for voting rights and rights of conversion of the Series
A shares. After stockholder approval of the voting rights and rights of conversion of the Series A
shares, the holders of Series A shares will be entitled to vote on all matters presented to the
holders of K12 common stock (other than for the election and removal of directors, on which the
holders of Series A shares shall have no vote) and the Series A shares shall be convertible into an
equal number of shares of K12 common stock. Holders of the Series A shares have a par value
liquidation preference and are entitled to participate on a pro rata basis in all dividends and
distributions made to holders of the K12 common stock. In the event that the K12 stockholders do
not approve the voting rights and rights of conversion of the Series A shares by the first
anniversary of the closing of the acquisition, the Series A shares will be redeemable at the option
of the holder or K12 at a price per share of the greater of $22.95 or the price per share of the
K12 common stock at the date of redemption.
K12 expects to convene a special meeting of the K12 stockholders in the Fall 2010 to consider the
approval of the voting rights and rights of conversion of the Series A shares. K12 has entered
into a voting agreement with Learning Group LLC and certain of its affiliates pursuant to which
they have agreed to vote their shares of K12 common stock equal to approximately 17.2% of the
outstanding shares in favor of the approval of the voting rights and rights of conversion of the
Series A shares.
As a part of the transaction, KCDL Holdings LLC and certain of its affiliates that are stockholders
of K12 entered into a stockholders agreement pursuant to which they have agreed to be bound by
transfer restrictions on their shares of stock of K12 (including the newly-issued Series A shares)
for a term of up to one year from the date of the closing of the acquisition and agreed to other
restrictions regarding their shares and activities.
Advisors to K12 in the Acquisition:
In evaluating the transaction, among other information, the K12 Board of Directors received an
opinion from its financial advisor, Duff & Phelps LLC, that the consideration paid in the
acquisition was fair from a financial point of view to K12 and its stockholders (other than
Learning Group LLC and its affiliates) as of the date of the opinion. Kirkland & Ellis LLP served
as legal counsel to K12.
About K12 Inc.:
K12 Inc. (NYSE: LRN), a technology-based education company, is the nations largest provider
of proprietary curriculum and online education programs for students in kindergarten through high
school. K12 provides its innovative, award-winning curriculum and academic services to online
public and private schools, traditional classrooms, blended school programs, and directly to
families.
In partnership with school district and charter schools, K12 operates online public schools in 25
states and the District of Columbia. K12 also operates the K12 International
AcademyTM, an accredited, diploma-granting online private school serving students
worldwide.
K12 has provided over 1.5 million courses to more than 150,000 students worldwide, and has received
numerous awards and honors for academic achievement and innovation. Over 95 percent of parents
surveyed are satisfied with the K12 program and agree that their children have benefited
academically with K12.
K12 provides courses in English/Language Arts, Math, Science, History, Music, and Art. The K12
High School program offers students a catalog of more than 130 core, elective, and AP® courses.
K12s powerspeaK12® world language program provides courses for students in grades 3-12
in Spanish, French, German, Latin, and Chinese.
More information can be found at www.K12.com.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of federal securities
regulations. These forward-looking statements are identified by their use of terms and phrases such
as anticipate, believe, could, estimate, expect, intend, may, plan, predict,
project, will, continue and other similar terms and phrases, including references to
assumptions and forecasts of future results. Forward-looking statements are not guarantees of
future performance and involve known and unknown risks, uncertainties and other factors which may
cause the actual results to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are not limited to: the reduction of
per pupil funding amounts at the schools we serve; reputation harm resulting from poor performance
or misconduct of other virtual school operators; challenges from virtual public school opponents;
failure of the schools we serve to comply with regulations resulting in a loss of funding;
discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or
funding disputes; termination of our contracts with schools due to a loss of authorizing charter;
failure to renew existing contracts with schools; KCDLs businesses and the acquisition, the timing
of the meeting of stockholders to approve the voting rights and rights of conversion of the Series
A Special Stock; the effects of disruption from the transaction making it more
difficult to maintain relationships with employees, customers, other business partners or
governmental entities; the ability to realize the expected synergies resulting for the transaction
in the amounts or in the timeframe anticipated; the ability to integrate KCDLs businesses into
those of K12 in a timely and cost-efficient manner; increased competition; and other risks and
uncertainties associated with our business described in the Companys filings with the Securities
and Exchange Commission. Although the Company believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no assurance that the
expectations will be attained or that any deviation will not be material. All information in this
release is as of July 26, 2010, and the Company undertakes no obligation to update any
forward-looking statement to conform the statement to actual results or changes in the Companys
expectations except as required by law.
Additional Information and Where to Find It:
K12 plans to file with the Securities and Exchange Commission and mail to its stockholders a proxy
statement in connection with the proposed approval of voting rights and rights of conversion of the
Series A Special Stock by the holders of the outstanding shares of K12 common stock. The proxy
statement will contain important information about the acquisition of KC Distance Learning, Inc.
and the Series A Special Stock and related matters. INVESTORS AND STOCKHOLDERS ARE URGED TO READ
THE PROXY STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE. Investors and stockholders will be able
to obtain free copies of the proxy statement and other documents filed with the SEC by K12 through
the web site maintained by the SEC at www.sec.gov. In addition, investors and stockholders will be
able to obtain free copies of the proxy statement when it becomes available from K12 by contacting
Investor Relations by telephone at (703) 483-7000, by mail at K12 Inc., Investor Relations, 2300
Corporate Park Drive, Herndon, Virginia 20171, or by going to K12s Investor Relations page at
www.k12.com.
Participants in Solicitation:
K12 and its directors and executive officers may be deemed to be participants in the solicitation
of proxies from the stockholders of K12 in connection with the solicitation of the proposed
approval of voting rights and rights of conversion of the Series A Special Stock. Information
regarding the interests of these directors and executive officers will be included in the proxy
statement described above. Additional information regarding these directors and executive officers
is also included in K12s proxy statement for its 2009 Annual Meeting of Stockholders, which was
filed with the Securities and Exchange Commission on October 19, 2009. This document is available
free of charge at the SECs web site at www.sec.gov and from K12 by contacting Investor Relations
by telephone at (703) 483-7000, by mail at K12 Inc., Investor Relations, 2300 Corporate Park Drive,
Herndon, Virginia 20171, or by going to K12s Investor Relations page at www.k12.com.
* * *
© 2010 K12
Inc.
K12,
powerspeaK12 and iQ Academies are
registered trademarks, and the K12
logo, Aventa Learning, Keystone and K12
International Academy are trademarks of K12 Inc. or its subsidiaries. All other trademarks are the
property of their respective owners.
Contacts:
Keith Haas
SVP, Finance and Investor Relations
703-483-7077
khaas@K12.com
SVP, Finance and Investor Relations
703-483-7077
khaas@K12.com
Jeff Kwitowski
VP, Public Affairs
703-483-7281
jkwitowski@K12.com
VP, Public Affairs
703-483-7281
jkwitowski@K12.com