Shareholders of embattled education provider Vocation Ltd (ASX: VET) scrambled for the exits this morning after the stock finally emerged from a self-imposed suspension, which it has resided in for roughly five weeks.
The stock opened 72% lower at just 7 cents this morning but has since rebounded to 14 cents.
So What: As can be seen in the chart below, Vocation has been an enormous disappointment for investors. Its shares have crumbled more than 95% over the last five months after the company downplayed the impact of a $19.6 million cut in funding by the Victorian government on some of Vocation's training programs and organisations. This resulted in numerous profit downgrades and the eventual resignation of CEO Mark Hutchinson.
Source: Google Finance
In an update this morning, Vocation said that it would recognise write-downs worth up to $245 million in its Vocational Education division, while it also said that there had been "weakening of revenue" in some Vocation businesses. Having finalised the amendment of its loan facility terms, Vocation is also obliged to "materially deleverage" its balance sheet and must provide regular updates to its bank group lenders on cash balances and litigation proceedings.
Vocation has also commenced a formal competitive sale process of certain businesses, for which it says it has received over 30 expressions of interest.
Now What: In this morning's update, the company said it: "Anticipates it will complete any sale processes by the end of April 2015, and expects to have a viable ongoing business after this." Regardless of whether Vocation does have a 'viable ongoing business', the company has lost the trust of investors and analysts. Given the state of the company, investors would be unwise to even consider buying the stock.
A much safer bet than Vocation Ltd
