In desperate survival bid, Apax Leaders seeks loans from shareholders

Nguyen Ngoc Thuy, chairman of Apax Holdings, the parent company of Apax Leaders, said at an online meeting Sunday with shareholders that the company is facing a severe cash crunch, and promised those lending it money would get 8% interest and full repayment within 13 months.

By Monday afternoon Egroup, the parent company Apax Holdings, had received over VND2 billion ($84,000), it told VnExpress.

Around 700 shareholders support the company’s restructuring plan, it said.

The company started facing difficulties last November when its students claimed the teaching quality had deteriorated, teachers and other staff said they had not received their salaries for months and creditors said they had not been paid interest for.

The situation worsened in the last three months when Apax Leaders did not have the money to pay for expenses.

The company used to have 130 centers across the country, which made it one of the largest in Vietnam, but the number has dropped to 18.

It has had to close 21 centers since December, and Thuy said if it could not raise VND5 billion by Tuesday it would have to close two centers in Hanoi and Ho Chi Minh City, one a key facility in the capital and the other the only one left in the south.

"We cannot wait anymore because this is all we have left. There is very little chance of saving the company if we cannot keep these centers."

Nguyen Anh Tuan, who became the CEO of Apax Leaders at the end of January, said he is determined to revive the company since it still has many centers with great potential.

"As long as there are facilities, students and teachers, I will fight."

For instance, a center in HCMC’s Thu Duc City had 1,600 students before it closed in February, and if each paid VND2 million the profit would be VND1.5 billion, he said.

Each center could earn enough revenues to run on its own if it has enough money to pay for short-term expenses, he said.

But shareholders and creditors seem to be less confident than the company’s leaders.

The admin of a social media group of 700 shareholders and creditors, who asked not be identified, said the company is only trying to shake off its short-term challenges.

"Apax Leaders might raise a few billion dong, but that would be too little [to repay the debts]. In my opinion most shareholders and creditors are not willing to lend."

Apax Holdings had run up debts of VND1.92 trillion by the end of last year, or 20% more than its equity.

Thuy said the company had expenses of VND500 million a day last year, mostly debt servicing.

Bonds accounted for 60% of debts, and banks and individuals for the rest.

Apax Holdings and its associated have to redeem six bonds worth a total of VND1.34 trillion. They carry coupon rates of 12-12.5%.

The company is now giving shareholders and creditors two options to get their money back: They can invest more to become "premium shareholders" who can directly participate in the management of the company or exchange the debts for property by paying the difference.

A creditor in Hanoi who asked not be identified said in either case people have to invest more money, and the properties Apax Holdings is offering, valued at VND6-16 billion, belong to a property developer and it is merely helping that party liquidate the assets.