LOOKING TO DISPEL MARKET CONCERNS
Nova Corp. is considering issuing new shares to strengthen its capital and dispel market concerns that its business could worsen in the wake of the government’s order to suspend part of its operations, President Nozomu Sahashi said.
Although the details have yet to be worked out, the embattled English-language school operator thinks tapping external capital is a “measure toward a next step,” Sahashi said Friday in his first interview after the business suspension order was imposed by the Ministry of Economy, Trade and Industry.
He dismissed the possibility of capital or operational tieups with rival language schools, saying, “We cannot expect a synergy.”
However, he did refer to the possibility of concluding alliances with companies in other industries.
On prospects for the current business year through next March, Sahashi said Nova will have a tough time in the first half but will see some improvement in the second half. “It is possible that we could return to profitability,” he said.
The company booked a net loss of 2.50 billion yen for the year through March 31.
Following the order byMETI, Nova suspended part of its business Thursday for six months.
The ministry said many Nova students were unable to take lessons at a school or time of their choosing in contradiction to Nova telling potential customers they could book language lessons “anytime and anywhere.”
Nova’s management “must take responsibility,” Sahashi said, indicating the company will impose disciplinary measures on executives, including himself, in the future.
He also said Nova will set up an internal inquiry panel.
Nova is Japan’s biggest English-language school. Headquartered in Osaka, it has about 480,000 students.
It violated a law designed to protect consumers in fields such as education, beauty services and arranged marriages, METI said.
Subsidies to end
The welfare ministry said Nova Corp.’s English-language courses will no longer qualify for government subsidies designed to support educational opportunities because the company lied to consumers.
The Health, Labor and Welfare Ministry said the subsidies will no longer be given starting Wednesday. This will be a major blow to the English-language school operator.
The government provides subsidies for people engaged in educational training authorized by the welfare ministry to improve the abilities of the unemployed and other people.
The welfare ministry approved 32 Nova courses for the subsidies in 1999. In fiscal 2006, about 4,700 people received a total of 560 million yen in subsidies.
Since 1999, around 71,000 Nova students have received a total of about 16.1 billion yen.
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