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ZAKZAK: The mysterious foreign holders of Nova’s equity warrants

It looks as though in trying to scrape together cash to pay everyone and keep Nova afloat somehow, Sahashi has made deals with some shady people. ZAKZAK ran an story yesterday about the president of Roots and the equity warrants Nova issued. Here's a translation of the story.

The mysterious foreign holders of Nova’s equity warrants

The spreading unease among market players

Major English conversation school Nova is in a serious cash crunch over issuing refunds for canceled contracts. Following the issue of new equity warrants to two foreign funds, Nova will be able to obtain funding at the end of October, but the way it is doing so is causing market players to ask if this is a good thing. Today is payday for Nova’s foreign teachers and the company continues to tread a thin line.

A representative at a securities firm lamented, “Nova’s cash flow problems have finally come to a head.”

At the beginning of October, Nova announced the issue of 200 million new equity warrants to two foreign funds. The new equity warrants give the funds the right to purchase Nova shares at a certain price. If the funds exercise their rights, Nova would issue stock and use the money from the sale to operate the company.

The new warrants will be issued to the two funds on October 24 and net Nova 70 million yen.

The warrants allow stock to be purchased at 35 yen a share, and if the entire 200 million warrants are exercised, Nova would raise 6.4 billion yen minus financial fees.

However, if all of the warrants are exercised, the amount of issued shares would triple. Nova shares would be greatly diluted, and the 70% share in Nova held by Sahashi and his affiliates would plummet to 18%, effectively selling the company. This entire effort to raise money depends on the price of Nova’s shares. Under the agreement, the two funds must exercise their warrants upon Nova’s request, but if the share price drops below 35 yen at the end of the month, Nova loses its ability to demand that the warrants be exercised.

The share price is projected to be between 35-45 yen, but whether everything goes according to plan depends on some shady elements.

What is troubling are the owners of the warrants. Rich Peninsula Trading Limited and Tower Sky Profits Limited are two funds based in the tax haven of the British Virgin Islands.

Both funds have the same address and the same representative, Callumberg Limited, an unknown company, according to one securities analyst, backed by European money and possibly run by Japanese.

In 2005, the two funds undertook equity warrants from clothing retailer Ichiya, but a portion of the warrants remain unconverted leaving Ichiya to accept them at no cost. That same year, the funds were first named as investors in a private placement for precision equipment maker Union Holdings, but a “clerical error” resulted in no payment being made.

The securities analyst expressed concern noting that up to now, the name Callumberg has been associated with bankruptcies and companies delisted from the stock exchange.

With Nova strapped for cash, many market players are concerned.

Since April, the number of contract cancellations has sharply increased with the General Union, the union Nova’s teachers belong to, estimating the total amount of the refunds to be more than 10 billion yen.

This is in addition to the fact that the Japanese staff and foreign teachers have had their pay delayed resulting in the Chuo Labour Standard Inspection Office issuing four warnings of non-compliance.

Even on the critical issue of income, Nova is in a precarious situation as the six-month administrative punishment doled out by METI in June prevents Nova from signing new lesson contracts.

How long will Nova continue to tread that thin line?

Original article

NOVA新株予約権発行先は正体不明の海外ファンド

市場関係者に広がる不安

中途解約者へのレッスン料返還などで、厳しい資金繰りが続く英会話教室最大手のNOVA。10月下旬には、海外の投資ファンドに新株予約権を発行して資金を調達するが、この調達手法に市場からは「大丈夫なのか」と不安の声が上がる。きょう15日は外国人講師の給料日。綱渡りの経営はまだまだ続く。

「(NOVAの資金難は)いよいよここまで来てしまったか」-。ある証券会社の情報担当者はため息をついた。

10月に入り、NOVAは海外のファンド2社に計2億株の新株予約権を発行すると発表した。新株予約権とは、NOVA株を特定の価格で購入できる権利のこと。海外のファンドに株を購入できる権利を発行し、ファンドから入る予約権と株式の代金を運転資金に回そうとしているわけだ。

新株予約権は24日に2社に発行され、NOVAはまず予約権の代金計7000万円をゲット。

予約権では新株を1株35円で購入できるようになっており、権利(計2億株)がすべて行使されれば、NOVAは諸費用を差し引いて64億円を調達できる算段だ。

ただ権利がすべて行使された場合の2億株は発行済み株式数の3倍近い量。NOVA株はとてつもなく希薄化することになり猿橋望社長と関連会社の持ち株比率は70%超から約18%にまで低下、事実上の会社売却となってしまう。もっともこの資金調達がうまくいくかは株価次第。契約ではNOVAから請求があれば2社は予約権を行使しなければいけないが、月末の株価が新株購入価格の35円を下回った場合、翌月の行使請求はできないことになっている。

株価はこのところ、30円台後半から40円台前半で推移しており、計画通り資金調達できるかは不透明な部分もある。

さらに気になるのが、予約権の引受先だ。「リッチペニンシュラトレーディングリミテッド」と「タワースカイプロフィッツリミテッド」のファンド2社はいずれもタックスヘイブン(租税回避地)の英バージン諸島に本拠を置く。

2社はバージン諸島の同じ住所にあり、代表者も同じ「カランバーグリミテッド」という会社。「スポンサーは欧州の資金で、日本人も運営にかかわっているとされる」(ファンド関係者)が、詳細は不明だ。

2社は2005年、紳士服販売会社「イチヤ」の新株予約権を引き受けたが、一部が新株に転換されないままイチヤが無償で引き取った。同年、精密機器製造「ユニオンホールディングス」の第三者割当増資の引受先として当初名を連ねたが、「事務手続き上の誤りがあった」などとして払い込みをしなかったこともある。

さらに「これまでにカランバーグの名前が出てきたケースとしては、経営破綻した企業や上場廃止となった企業などワケありの銘柄が多い」(先の証券会社情報担当者)といい、そのことを不安視する向きもある。

ここにきてNOVAの資金繰りに不安感を抱く市場関係者は多い。

今年4月以降、中途解約が急増し、NOVAの外国人講師が所属する労働組合「ゼネラルユニオン」はレッスン料の返金額を100億円以上とみている。

また、日本人従業員や外国人講師の給与では遅配が目立ち、大阪中央労働監督署から4回も是正勧告を受けた。

肝心の収入も、経済産業省の行政処分により、長期の新規契約は6月から6カ月間差し止められており、おぼつかない状況だ。

綱渡りの日々はいつまで続くのだろうか…。

Japan: 
Eikaiwa: 

Comments

nice translation, thanks shawn.

It is a bit of a mute point with the stock price closing at 30 (down to 28 at one stage) today
Who would want to buy this junk bond

The "silent point" of the stock price is MOOT!

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