English-language school Nova Corp. has raised ¥70 million in cash by issuing warrants for 200 million shares in total to two investment companies registered in the Virgin Islands, according to a paper submitted to the Kanto Local Financial Bureau and released to the public Tuesday.
According to the paper, the scandal-hit language school will use the cash to cover such expenses as teachers’ salaries and property rent.
If the two firms fully exercise their right to obtain new shares, for a cost of ¥7 billion in total, it would increase the number of Nova’s outstanding shares fourfold, diluting the share value and thereby damaging the assets held by current stockholders.
In such a case, Nova would receive ¥6.4 billion, excluding the costs of issuing new shares.
The paper identified the two investment firms as Rich Peninsula Trading Ltd. and Tower Sky Profits Ltd. For a period of about one year starting Oct. 24, they can exercise the right to purchase shares for ¥35 apiece, the paper said.
Nova has about 67.6 million outstanding shares. The stock’s price closed at ¥40 Tuesday.
METI to step in
The Ministry of Economy, Trade and Industry plans to order Nova Corp. to promptly pay back tuition to customers who cancel lessons in accordance with their contracts, officials said Tuesday.
The labor union assisting teachers at the scandal-hit chain of English-language schools meanwhile requested that METI take action to secure the teachers’ jobs and prevent further harm to students.
Nova, an industry leader, has been hit with decreasing enrollment and numerous canceled contracts since it was ordered by METI in June to suspend part of its operations for lying to consumers in advertisements about its services.
Concerned that Nova’s actions could damage the image of the entire English-language school industry, METI has decided to set up measures in cooperation with industry organizations such as the Japan Association for the Promotion of Foreign Language Education, the officials said.
Nova is scheduled to submit to METI by next Monday a report on its plan to improve operations.
On behalf of Nova teachers, representatives of the General Union, whose members include foreign instructors working for language schools, visited the ministry to file a written demand directed to METI chief Akira Amari.
“Nova is now facing a serious crisis,” Katsuji Yamahara, head of the multinational General Union, said at a news conference after meeting with ministry officials. “We asked METI for immediate action to save customers and teachers.”
Many former students have not had their tuition fees refunded even after leaving the school, Yamahara said.
“Only Nova knows how many such cases exist and how much money has not been returned,” he said. “It could be huge.”
Union officials also said Osaka-based Nova had temporarily failed to pay wages to some of its teachers, mainly those of foreign nationality. Wages for some of its Japanese staff have been put on hold as of Tuesday.
Some 4,000 foreign teachers are currently registered with Nova nationwide. The number has been declining from a high of 6,000 due to the company’s numerous problems with employees, the union officials said.
Nova is reportedly looking to close some 200 of its 900 branches nationwide in an effort to revamp operations that have been battered by the scandal.
“It’s not pleasant working for Nova right now,” Bob Tench, a British teacher who has worked at Nova for 13 years, said.
“Every month we don’t know if we are going to get paid or not. A company like Nova, a big employer, can be more professional in the way it does business,” said Tench, a member of the labor union.