Ambow Education Holding Ltd. · AMEX:AMBO
Ambow Education — Presentation (September 2013)
39 slides from Ambow Education's investor presentation, Sep 20, 2013
Slide 1: Ambow Education Holding Ltd. (in Provisional Liquidation)
Ambow Education Holding Ltd. (in Provisional Liquidation)
Slide 2: Contents
Contents The contacts in connection with this Report are: Cayman Islands:- Kris Beighton Tel: +1 345 914 4392 Fax: +1 345 949 7164 krisbeighton@kpmg.ky Hong Kong:- Edward Middleton Tel: + 852 2140 2833 Fax: + 852 2869 7357 edward.middleton@kpmg.com Tiffany Wong Tel: + 852 2140 2367 Fax: + 852 2869 7
Slide 3: Basis of report and disclaimer
Basis of report and disclaimer Basis of Report This Report has been prepared by the Joint Provisional Liquidators (“JPLs”) of Ambow Education Holding Ltd. (In Provisional Liquidation) (“the Company”) pursuant to paragraph 6 of the Order of the Grand Court of the Cayman Islands (“the Court”) dated Au
Slide 4: Glossary of terms
Glossary of terms First Report to Creditors and Shareholders of Ambow Education Holding Ltd. (in Provisional Liquidation) dated September 13, 2013
Slide 5: 1. Executive summary
1. Executive summary
Slide 6: Executive summary
Executive summary First Report to Creditors and Shareholders of Ambow Education Holding Ltd. (in Provisional Liquidation) dated September 13, 2013
Slide 7: Executive summary (cont.)
Executive summary (cont.) Events Summary observations Restructuring Process The JPLs have sought expressions of interest for both short-term and long-term funding, and are in the process of negotiating with multiple parties in an effort to facilitate a financial restructuring. The JPLs are exploring
Slide 8: 2. Introduction
2. Introduction
Slide 9: Introduction: Business overview
Introduction Business overview The Company is a Cayman Islands incorporated company with ADS traded on the NYSE. The Group is in the business of providing education services and career enhancement services in the PRC. This business is primarily conducted through three variable interest entities (VIE
Slide 10: Introduction: VIE structure
Introduction VIE structure The purpose of this structure is to ensure control is maintained over the VIEs and, indirectly, their subsidiaries while facilitating the receipt of economic benefits pursuant to service agreements entered into with Ambow Online. There are certain risks which are inherent
Slide 11: Introduction: Background to the JPLs' appointment
Introduction Background to the JPLs’ appointment Allegations by a former Group employee prompted an investigation by the Company’s Audit Committee in July 2012. In March 2013, members of the Audit Committee resigned citing management’s failure to facilitate completion of the Audit Committee Investig
Slide 12: Introduction: Role & powers of the JPLs
Introduction Role & powers of the JPLs The JPLs were appointed as a result of concerns raised by the Petitioner. The main purpose of a provisional liquidation is the preservation of the assets of the Company. The Appointment Order provided the JPLs with powers to protect the assets of the Company an
Slide 13: 3. Operational risks and challenges
3. Operational risks and challenges
Slide 14: Operational risks & challenges
Operational risks & challenges The Group has been subject to negative publicity over the course of the past year which has resulted in a loss of confidence in business operations in the PRC. Management and the JPLs continue to liaise with regulators and local government to minimise any impact on the
Slide 15: 4. Solvency issues
4. Solvency issues
Slide 16: Cash position, operational cash management & forecasts
The aggregate cash balance for the Group at the date of appointment was c.USD24.1m; however, only a small portion of this was held offshore. The onshore business has managed to continue operations; however, cash flow is tight and it has has had the benefit of some external funding. The Group’s net c
Slide 17: Solvency issues: Secured lender
Solvency issues Secured lender The Company is in default of its repayment obligations and, as a result, the lender may enforce its security rights over the shares of the Company’s offshore subsidiaries. Upon appointment, the JPLs took steps to communicate with the IFC to seek a forbearance of the lo
Slide 18: Solvency issues: Onshore lender
Solvency issues Onshore lender Ambow Online has an outstanding loan with Bank of Beijing of c.USD3.2m (RMB20.0m) which is guaranteed by Ambow Sihua and Ambow Shida. The outstanding balance is due to be paid by Ambow Online in January 2014. Loan structure Ambow Online signed a consolidated credit fac
Slide 19: Solvency issues: Unsecured creditors
Solvency issues Unsecured creditors The JPLs have been provided with details of outstanding unsecured creditor claims totalling approximately USD10.0m. The JPLs have not yet verified any of these claims. Management have provided details of creditors of the Company to the JPLs totaling c.USD9.6m, whi
Slide 20: 5. Restructuring Process
5. Restructuring Process
Slide 21: Sourcing of short-term & long-term funding
Restructuring Process Sourcing of short-term & long-term funding Introduction From the information available to the JPLs, given the overdue installment on the SLPSL loan and lack of receipt of funds from SummitView, it appears that the Company is currently cash flow insolvent. The JPLs believe that
Slide 22: Outline of process & current status
The JPLs have undertaken a process to source potential bidders for further funding. The JPLs will provide further details of the results of this process upon the conclusion of any related negotiations along with details of any restructuring proposals. Restructuring Process Outline of process & curre
Slide 23: Restructuring Process: SummitView
Restructuring Process SummitView An SPA was executed on April 28, 2013 for 30.8m Class A shares to be issued to SummitView for USD21.0m payable in four tranches. The execution of the SPA, the issuance of shares and the payment of the first tranche all occurred after the Winding Up Petition had been
Slide 24: 6. Further considerations
6. Further considerations
Slide 25: Further considerations: Management interaction
Further considerations Management interaction The JPLs have been in regular contact with Management since the initial meeting on June 14, 2013. The JPLs have maintained a full time presence on site in Beijing to monitor the ongoing operation of the Group since the initial meeting. The directors have
Slide 26: Further considerations: Regulators
Further considerations Regulators The JPLs have taken pro-active steps to reach out to the regulators of both the Company and the Group. The NYSE is currently maintaining the trading halt of the Company’s ADS. The JPLs are working with Management to ensure that any concerns of the MOE and other loca
Slide 27: Further considerations: Current litigation
Further considerations Current litigation In addition to the class action in California, the JPLs are aware of two other actions on foot, in California and Hong Kong. The JPLs are aware of the following proceedings against the Company: California Class Action – A class of investors have filed suit i
Slide 28: 7. Status of Investigations and Audit
7. Status of Investigations and Audit
Slide 29: Status of Investigations and Audit: Overview
Status of Investigations and Audit Overview Investigations were initially conducted by Fenwick. DLA was subsequently engaged to continue these investigations. These investigations have not recommenced due to the Company’s liquidity issues, and will only recommence with the leave of the Court. MBP ha
Slide 30: 8. Stakeholder Committee
8. Stakeholder Committee
Slide 31: Stakeholder Committee: Role & selection process
The purpose of the Stakeholder Committee is to represent the interests of the stakeholders of the Company and the Group as a whole. The JPLs have absolute discretion in selecting the members of this committee. Role of Stakeholder Committee The JPLs are seeking to form a committee of creditors and sh
Slide 32: 9. Costs of the Provisional Liquidation
9. Costs of the Provisional Liquidation
Slide 33: Appointees & service providers: costs incurred to date
Costs of the Provisional Liquidation Appointees & service providers – costs incurred to date As of September 8, 2013 the JPLs have incurred c.USD2.9m in time costs and c.USD102k in disbursements. The JPLs have engaged legal counsel in Cayman, United States, Hong Kong and the PRC. Time costs and disb
Slide 34: 10. Next steps
10. Next steps
Slide 35: Next steps
Next steps The JPLs will continue to explore funding options including negotiations with potential funders alongside negotiations for debt restructuring. The JPLs will also continue to work with Management to maintain onshore operations. A further update will be circulated to all stakeholders on or
Slide 36: Appendix I Group structure chart
Appendix I Group structure chart
Slide 37: Group Structure Chart
Group Structure Chart 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Ambow Education Ltd. (Cayman) 100% Ambow Education Management (Hong Kong) Ambow Education Co (Cayman) Ambow Education Management Ltd (Cayman) Ambow School Consultation Management Limited (Hong Kong) Ambow Online (WOFE) 100%
Slide 38: Appendix II Appointment Order
Appendix II Appointment Order IN THE GRAND COURT OF THE CAYMAN ISLANDS FINANCIAL SERVICES DIVISION CAUSE NO: FSD 50 OF 2013 (AJJ) The Hon Mr Justice Andrew J. Jones QC In Chambers, 7 June 2013 IN THE MATTER OF THE COMPANIES LAW (2012 REVISION) (AS AMENDED) AND IN THE MATTER OF AMBOW EDUCATION HOLDIN
Slide 39: Appendix III Revised Order
Appendix III Revised Order IN THE GRAND COURT OF THE CAYMAN ISLANDS FINANCIAL SERVICES DIVISION CAUSE NO: FSD 50 OF 2013 (AJJ) The Hon Mr Justice Andrew J. Jones QC In Chambers, 22 August 2013 IN THE MATTER OF THE COMPANIES LAW (2012 REVISION) (AS AMENDED)
Ambow Education Holding — Presentation (September 2013) on 6ix