Posted by debito on October 28th, 2007
Hi Blog. The bankruptcy of NOVA, Japan’s erstwhile biggest eikaiwa school, is big news, so Debito.org need not amplify it much more (I try to give cyberspace to issues less covered). But for the sake of completeness, here is something from Ken Worsley of Trans Pacific Radio, courtesy of Metropolis. Do a quick search of this blog for “NOVA” for a few links to other germane stories.
Arudou Debito in Kyoto
By Ken Worsley (http://www.JapanEconomyNews.com)
On the morning of Friday, October 26, a story appeared in the Yomiuri Shimbun announcing that Nova President Nozomu Sahashi had been ousted from his position at an emergency board meeting the previous night. The remaining three board members announced that the firm would file for court protection from creditors under the Corporate Rehabilitation Law.
Amid speculation that Sahashi has gone into hiding, a former Nova manager told us, “Sahashi probably hasn’t done a runner; he just didn’t turn up to the meeting last night, and he was always bad at turning up to meetings… Sahashi sent out a fax yesterday telling all employees that he had finally arranged it so that everyone would be paid. Then last night there was an emergency meeting where he was sacked, so that was a pretty big shock.”
An article published by the Nihon Keizai Shimbun the same morning stated that Nova was holding an eye-popping ¥43.9 billion in liabilities.
JASDAQ has announced that Nova trading was suspended on October 26, the day of the announcement, and that the firm would likely be delisted from the stock exchange as of November 27.
At the time of this writing, Nova has closed its doors, though this has been announced as a temporary measure. Thousands of employees, both Japanese and foreign, are all missing at least one paycheck and have been left waiting for news on their employer’s future.
On October 10, Nova announced that it had sold 400 equity warrants to two investment funds located in the British Virgin Islands. If exercised, these warrants would have created 200 million new shares in the company, with the investment funds paying ¥35 per share. Such a deal could have injected up to ¥7 billion into the ailing English language school operator.
Although those warrants could have been exercised from October 24, Nova’s share price remained too low for the option to be taken.
With the legality of that transaction in question, the JASDAQ has said that it will spend the next year examining how to create rules on such examples of corporate fund procurement via third parties.
Our source at Nova said he had never had much faith in Nova’s business plan. “The business model for Nova never really worked. They took money from customers and then spent it. They need a constant influx of money and, since the METI ban in June, there has been no money coming in and no new customers so the business simply couldn’t survive.”
Interviews with sources wishing to remain anonymous.
Research provided by Japan Inc. Magazine (http://www.japaninc.com)