Local firm's IPO foresees dollars in education

The Baltimore Sun

Camden Learning Corp., a Baltimore blank-check company formed with the broad goal of investing in the education industry, is hoping to raise $36 million in an initial public offering.

The development stage company, backed by the Baltimore private equity firm Camden Partners, has two executive officers, no full-time employees and no detailed business plan.

The company hopes to use IPO proceeds to make an acquisition, though no deal is under way, according to recent public filings with the Securities and Exchange Commission. "We do not have any specific business combination under consideration or contemplation, and we have not, nor has anyone on our behalf, contacted any potential target business," the company said in an SEC filing last week.

So-called blank check companies, which don't sell or make products but rather seek to buy businesses, capitalize on marquee names behind the venture and typically focus on specific market sectors.

Camden Learning's board of directors includes William L. Jews, the former CEO of regional health insurer CareFirst BlueCross BlueShield and currently a director of homebuilder Ryland Group and hotel operator Choice Hotels International Inc.

Another director is Jack L. Brozman, the president of Concorde Career Colleges, which provides training in health-related careers. He's former chief executive of La Petite Academy Inc., a nationwide chain of child care centers.

Camden Learning is headed by David L. Warnock, who left T. Rowe Price Group Inc. and founded Camden Partners in the mid-1990s. He declined yesterday to comment on the IPO, saying he was constrained by SEC rules.

In a filing, Camden Learning notes that the U.S. education industry has shown "substantial growth" in the past decade, spurred by the need for a skilled work force, international competition and high levels of funding.

"It's a really stable industry, and people are investing in it," said Nicole Engelbert, a senior education analyst at research firm Datamonitor. "Education is something that will be on the presidential campaign agenda. And it's something that the United States in particular is investing in as it sees the need to compete amid advancing globalization."

The IPO comes as two other Baltimore education companies are going private.

Laureate Education Inc., which operates online and foreign universities, announced yesterday that shareholders had tendered a majority of shares for a management-led buyout.

Educate Inc., which operates Sylvan tutoring centers, completed a similar deal last month.

Some Wall Street investors have been reluctant to turn their attention to the industry since stock in companies such as Edison Schools Inc., a for-profit company that manages public schools, were trounced and the business became controversial, said Thomas Toch, co-director of Education Sector, a Washington think tank.

Edison was taken private several years ago.

But other types of companies, such as providers of higher education and assessment services, might prove to be hot investments, Toch said.

Camden Partners has made investments in education companies including New Horizons Worldwide Inc. an information-technology training company, and Nobel Learning Communities, an operator of private schools.

In outlining the risks to potential investors, Camden Learning said that only 45 blank check companies have either consummated a business combination or entered into an agreement to do so out of 101 that have completed IPOs in the past four years.

Some protections for investors have been built into Camden Learning's corporate structure. It would take only 30 percent of shareholders voting against a deal to scuttle it.

The company also has two years to carry out a transaction before it must liquidate and return the proceeds to shareholders. However, the company said, the full investment would not be returned because some of the proceeds will cover expenses incurred while a deal is sought.

The company plans to sell common stock and warrants on the OTC Bulletin Board. It has tapped Morgan Joseph & Co. to underwrite the offering.

laura.smitherman@baltsun.com

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