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Milken, partners seeking investors

March 21, 2007|Martin Zimmerman | Times Staff Writer

A partnership that includes former junk bond king Michael Milken is looking for investors interested in putting as much as $1 billion into its educationrelated ventures.

Details of the offering were sketchy. However, a spokesman said Tuesday that Knowledge Universe Education had retained two investment banks to manage a private placement. About half of the offering has been placed.

Milken, his brother Lowell and Steven Green, former U.S. ambassador to Singapore, are principals in the partnership, which "decided to diversify its ownership by a private offering to a few highly sophisticated international institutional investors," spokesman Geoffrey Moore said.

The company, operating as Knowledge Learning Corp., runs about 2,000 early-childhood education centers, mostly under the KinderCare name. The company also provides before- and after-school tutoring programs and other educational services.

According to its website, KinderCare and Knowledge Learning serve more than 200,000 children in 39 states and the District of Columbia.

Providing for-profit education services became a hot topic in the 1990s as Americans looked to business for solutions to problems within the nation's public schools. Resistance from educators, parents and elected officials, and the failure of some companies to perform as advertised, have slowed growth.

Consultant Stan Lepeak estimates that fewer than 10% of U.S. schoolchildren are enrolled in private-sector programs, but he said the prospects were still promising.

"It seems there is money to be made there," he said. "People realize the value of education and are willing to spend money on it."

Moore said the private placement didn't conflict with Milken's lifetime ban from the securities business, which was imposed in 1991 after Milken pleaded guilty to six federal counts of stock fraud. The charges grew out of Milken's work in high-risk junk bonds, which revolutionized corporate finance in the 1980s.

Lawyers for Milken, the partnership and the investment banks "found no issue with his role in the company or with the offering," Moore said.

In 1998, Milken agreed to pay $47 million to settle charges that he violated the ban by consulting on a number of deals.

In addition to various business and philanthropic ventures, Milken runs the nonprofit Milken Institute in Santa Monica, known for annual conferences that attract high-profile participants from business, government and science.

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