Embattled private education provider Vocation Ltd (ASX: VET) has announced that it would remain in a voluntary suspension (possibly until mid-February), after it revealed yet another profit downgrade – its fourth in just three months.
After months of heavy scrutiny, Mark Hutchinson announced he would step down from his role as chief executive as the company said it was now expecting a loss of roughly $27 million, compared to the $60 million profit it was expecting just months ago. The company said its latest revision comes as a result of the heavier-than-expected knock-on effects to student enrolments and the enterprise business following its settlement with the Victorian Department of Education and Early Childhood Development (DEECD) last October.
The company has initiated a strategic review in which it will consider all options, including mergers, divestments and recapitalisation. Given that the company is facing several class actions, including those led by Slater & Gordon Limited (ASX: SGH) and IMF Bentham Ltd (ASX: IMF), a merger seems unlikely but specific assets could certainly be sold.
Vocation said that a number of parties had expressed interest in acquiring some of its assets while it had appointed 333 Capital to assist it on those possible sales. The company's chairman, Doug Halley, said: "We would anticipate that given the level of interest we have received for some assets, we expect to be in a position to make a decision about the best options within weeks rather than months."
Indeed, the debacle surrounding the company's situation has certainly impacted shareholders. Since hitting a high of $3.40 in September 2014, the stock has retreated an agonising 92% to be trading at just 25 cents leading into the suspension from trading. Needless to say, investors should avoid Vocation altogether and instead focus on some of the market's most promising long-term opportunities.
