The bonds are secured by a pledge of revenues of ECS, a first mortgage lien on the facilities of ECS, assignments of rents and leases receivable and a cash funded debt service reserve fund.
KEY RATING DRIVERS
RATING WATCH POSITIVE: ECS' charter authorizer,
CHARTER UNCERTAINTY CONSTRAINS RATING: The 'B' rating reflects the academic performance driven charter term reduction in 2013 and the continued stress of operating under a severely abbreviated charter term. Favorable resolution of the charter renewal in the coming months could positively influence the rating.
FUTURE HINGES ON ACADEMICS:
FINANCIAL METRICS SUPPORT SCHOOL: ECS' full and stable enrollment, robust waitlists, consistently positive operating margins and relatively strong liquidity levels compare favorably to investment grade peers and remain key credit strengths.
MANAGEABLE DEBT BURDEN: Maximum annual debt service (MADS) comprises a relatively high 10.3% of fiscal 2013 operating revenues but is covered 2.3x by net income available for DS. ECS' long term debt constitutes 5x fiscal 2013 net income available for DS comparing relatively well to investment grade peers.
RATING WATCH CONSIDERATIONS: A confirmation of a renewal term of no less than three years could stabilize the rating.
CHARTER RENEWAL EXPECTATIONS IMPROVE
Fitch's previous rating downgrade to 'B' reflected ECS operation under a one year charter as of
Subsequent to the last review, BPS submitted a renewal recommendation for the charter. While the recommendation is not yet ratified by the SED and the term is unspecified, it is probable that a three year term is likely, due to ECS' previous status as needing academic improvement (obviating a full five year renewal) and the understanding that less than a three year renewal is too abbreviated a time frame to discern development in a school's overall academic achievement.
RATING WATCH POSITIVE
ENROLLMENT AND FINANCIAL PERFORMANCE STABLE
ECS' fall enrollment is at capacity with approximately 405 students for its K-8 classes. Fiscal 2013 results indicate a positive operating margin of 9.3% and growth in liquidity of about
Additional information is available at 'www.fitchratings.com'
-- 'Charter School Rating Criteria' (
-- 'Revenue-Supported Rating Criteria' (
-- 'Fitch Downgrades Enterprise Charter School (NY) to 'B', Maintains Rating Watch Negative' (
Charter School Rating Criteria
Revenue-Supported Rating Criteria
Tel: +1 212-908-0526
Source: Fitch Ratings
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