Corinthian Colleges CEO Waller Resigns; Massimino Retakes Helm

Corinthian Colleges Inc. (COCO) said Tuesday that Chief Executive Peter Waller resigned after less than two years as leader of the for-profit college operator.

Chairman Jack Massimino, who served as chief executive from November 2004 until July 2009, will take over from Waller, the company said.

Waller's resignation is the second high-level departure for the troubled college operator in as many months. Like other for-profit colleges, Corinthian faces slowing growth amid new scrutiny and increased regulations.

Last month, Matt Ouimet, then Corinthian's president and chief operating officer, left the company. Corinthian, whose school brands include Everest, Heald and WyoTech, said it has no immediate plans to fill the president and operating chief positions.

In after-hours trading, shares of Corinthian were off 4.6% to $3.95. The company's stock has been pummeled this year, losing nearly 70%, as investors fear it will need to overhaul its operations in order to comply with new rules regarding programs that graduate students with high debt loads.

Corinthian offers entry-level associate and certificate programs, and its students often have high debt levels. The company has warned it could run afoul of rules that cap how much revenue it derives from federal aid sources if it doesn't raise tuition. That would require students to find private funding. However, if it does increase tuition, students will have even higher debt loads and potentially default at higher levels.

"Our executive team is working diligently to improve the value we bring to students, strengthen operations and reduce regulatory risk," Massimino said in a statement. "Further, we have the balance sheet and liquidity needed to adapt to a changing regulatory environment."

The company reported cash and cash equivalents of $38.1 million at Sept. 30, down from $209.2 million just three months earlier. Operating cash flow was $4.5 million in the fiscal first quarter, compared with $80.7 million in the prior year. Corinthian announced earlier this month that it has suspended its stock-repurchase program.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; [e-mail]