Lincoln Educational Selling Shares Into Strength (LINC)

Lincoln Educational Services Corporation (NASDAQ: LINC) was one of the stocks on our list of those hitting 52-week highs today as the entire education sector was strong.  Now it looks like the company is taking advantage of the situation with an equity offering.  Most of the proceeds will also be going to shareholders rather than to the company.

The company plans to sell some 5,500,000 shares of common stock, with4,500,000 shares coming from shareholders and only 1,000,000 comingfrom the company itself. 

This offering is under a shelf registration statement.  It lists CreditSuisse Securities and Barclays Capital as joint book-running managers,and Robert W. Baird, BMO Capital Markets, J.P. Morgan, and BarringtonResearch are listed as co-managers.  The underwriting syndicate hasalso been given an overallotment option to purchase up to an additional825,000 shares.

Of the proceeds that the company will receive, Lincoln said it intendsto use some or all of the net proceeds to pay down debt under itscredit facility.  The rest is earmarked for thetraditional "general corporate purposes."

This closed up almost 3% at $16.99, above the prior 52-week high of$16.76.  But shares are down 8% at $15.60 in after-hours tradingbecause of the extra dilution.  The company has over 25 million sharesoutstanding, but the float was listed as almost 19.48 million shares.The dilution is taking a toll.

Jon C. Ogg
February 3, 2009