Apax Leaders reopens English teaching centers, swaps debt for real estate

Egroup, which owns several businesses in Hanoi, said the reopening of 31 Apax centers as of March 31 has helped it complete phase one of its restructuring plan, which followed crises such as delays in salary payments to teachers, interest and principal payments to creditors investors and refund of tuition fees after many centers closed.

It now has seven centers in Hanoi and five in HCMC. Nguyen Anh Tuan, CEO of Apax Leaders, told VnExpress the three most important requirements for a language school are curriculum, teachers and customer care.

"We will apply these (the three elements) within the next three months and hopefully basically complete the restructure in eight months."

The school still lacks teachers and is seeking to recruit native speakers. The total number of returning students is only 14,000.

Three reopening centers have faced problems from parents and landlords, which have interrupted their operations.

Parents have been protesting saying their children have not been able to learn English at Apax for more than a year and they cannot wait longer for the refund of tuition.

At a recent meeting with parents in HCMC, Nguyen Ngoc Thuy, also known as Shark Thuy, chairman of Egroup and Apax Leaders, promised to start refunding in June.

People whose dues have been determined – based on how many classes their children missed -- will receive the money between June and August. The rest will get theirs between October and April.

Apax plans to reopen three to five centers in April and several in May, increasing the total to 44 by the end of next month.

But for this it needs around VND180 billion ($7.6 million).

Tuan said many investors have provided financial support. "Our entire board of directors, employees and investors are unanimous in their efforts to bring Apax back on the right track as it was in the 2018-2019 period and earlier."

But many investors are skeptical about the prospects.

One investor said: "Having the same number of centers as before the crisis will not necessarily help Apax succeed because things are different now."

Before 2019 it had renown, a large network and a leading position in the education market, but after the crisis it is difficult to sustain its prestige or find quality teachers, which used to be its unique selling point.

It is also difficult to mobilize large amounts of money now, the investor said.

Apax’s competitors are taking advantage.

At least two major English schools have succeeded in luring its students by offering tuition support programs, the investor said.

Meanwhile, Egroup is also seeking to redeem bonds it issued and repay investors who signed strategic cooperation contracts with its subsidiaries, Egame and Ecapital.

It proposes to swap its debts for real estate.

Investors who are owed less than VND1 billion can get land plots in the central province of Thanh Hoa. Each measures 100-194 square meters and is priced at VND300 million. The company will pay VND100 million and the investors need to pay the rest.

Those who are owed more than VND1 billion can choose to get a villa at the Wynham SkyLake Resort & Golf Club Project in Hanoi.

The villas cost VND12.5 billion or more and Egroup will pay VND6 billion of it.

Over 300 investors have agreed to swap, Tuan said, adding that 100 have already been completed.

However, many want their money back in cash.

Duong Quan, who invested over VND3 billion in Egroup, said the prices are higher than on the property market, and land and villas have low liquidity amid the current market slump.

Thuy said: "Of course, there are still many angry investors and parents. This will only change when the company is successfully restructured."

But the most important factor in saving Apax is resuming classes, he said.

Thuy, who became well-known after participating in the TV reality investment show Shark Tank Vietnam in 2018 and 2019, said the Covid pandemic forced education facilities to close in 2020 and 2021 and caused major disruptions to Egroup’s cash flows.

"This is the main reason for our difficulties in doing business, operating and paying salaries and debts," he told VnExpress.

In the last two years they had to transition from teaching face-to-face to online, which cost millions of dollars, while still having to pay rents and other costs, he added.