Philadelphia Pays Edison Schools
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PHILADELPHIA (AP) _ The Philadelphia school system sent Edison Schools its first $5.3 million paycheck this week after signing a deal guaranteeing that the district wouldn’t be left without school equipment and supplies if the company failed.
Philadelphia hired Edison this summer to take over 20 of the district’s most troubled schools.
But the city withheld the firm’s pay for several weeks while the two sides negotiated what would happen to the $6 million worth of computers and textbooks Edison plans to buy for the schools if the firm quit, went bankrupt or was fired.
Edison, the nation’s largest for-profit manager of public schools, has repeatedly denied that it is in danger of financial collapse, saying it has more than $30 million cash and enough capital to continue operations for at least another year.
But concerns about the firm’s plunging stock value and failure to turn a profit have prompted officials nationwide to draft contingency plans.
Philadelphia’s schools chief, Paul Vallas, had also demanded to see Edison’s latest financial reports to confirm the company’s fiscal health. That paperwork has now been turned over but was ``inconclusive″ about the company’s viability, he said.
``But I’m confident that the contingency plan we have in place will protect us against any financial repercussions that their declining stock value may have in their ability to run schools,″ he said.
Edison’s stock has dropped steadily since April, and the firm has been threatened with removal from the Nasdaq Stock Market if the price doesn’t rise above $1 by late November. It closed at 44 cents per share Monday, down from more than $19 per share a year ago.
Under the terms of an agreement reached last week, Edison officials guaranteed that if the company is unable to complete its five-year, $60 million contract in Philadelphia, the school district _ rather than the company’s creditors _ will be able to take over equipment lease payments and get outright ownership of other supplies.
Edison is one of seven companies, universities and nonprofit groups hired this year to run a total of 45 of the city’s 264 public schools.