DALLAS - Citing lower-than-expected enrollment, Moody's Investors Service on Friday assigned a negative outlook to $6.65 million of charter school revenue bonds issued by the Colorado Educational and Cultural Facilities Authority on behalf of the Collegiate Academy of Colorado.
The bonds, which are rated Ba1 by Moody's, were sold in January in a deal managed by Stifel, Nicolaus & Co. The bonds have long-coupon interest rates of 7.5%.
Moody's was the only agency to rate the debt, which was used to finance the purchase of facilities that were formerly leased by Collegiate Academy, as well as the construction of an addition to replace three modular structures used for high school classes. The 5.5-acre facilities include a 39,900 square foot building with 20 classrooms, a playing field, and a parking lot.
The negative outlook by Moody's reflects the school's failure to enroll only nine additional students for the second semester of the current school year instead of the 25 that had been anticipated. The school's financial position is compromised still further by the announcement by 19 current students that they don't intend to return to Collegiate Academy for the fall 2002 semester.
"The school has a current enrollment of 520 students, but must increase full-time enrollment to 550 for the following school year beginning fall 2002 in order to meet debt service requirements," stated the Moody's release written by analysts Helen Cregger, Patrick Ford, and Linda Lipnick. "Moody's believes that the school's failure to add an expected 25 students for the second semester may indicate the challenges the school faces in attaining this goal."
The school, initially founded as the Sci-Tech Academy, opened in 1994, when it served a 126-student enrollment in grades seven through 12. In 1999, the school's enrollment jumped from 171 to 500, when a kindergarten through sixth-grade program was added to the curriculum.
In a Jan. 9, 2002 report, Moody's indicated that the Ba1 rating and stable outlook it awarded the school's first debt issuance reflected Collegiate Academy's seven-year operating history and reduced risks associated with a limited construction project, since the bulk of the facility was already built.
Standard & Poor's and Fitch Ratings have not rated the charter school.
"The rating also reflects the need for additional students in order to meet maximum annual debt service, although school officials expect that the new high school facilities will enhance their efforts to increase high school enrollment, which currently falls below capacity and has experienced high turnover and declines in student count," Moody's Jan. 9 report stated.
