RIDER UNIVERSITY CHAPTER 
American Association of University Professors
2083 Lawrenceville Road
Lawrenceville, NJ 08648-3099
609-896-0092   email aaup@rider.edu
 
AAUP Challenges Legitimacy of Newly announced Non-Profit Said 
To be created to Run Westminster Choir College

Lawrenceville, NJ August 8, 2018 – On August 8, 2018, the Westminster Choir College Acquisition Company (WCCAC), which claims to be a New Jersey-based not-for-profit corporation, issued two press releases. The first announced the creation of WCCAC and named its interim president, Mr. Larry Livingston. The second claimed its parent company, Kaiwen Education, is a well-funded, financially sound and transparent corporation that is well suited to run an American not-for-profit college. 
 
These press releases are the latest in a series of attempts to conceal Rider University’s illegal sale of one of America’s great music schools to a financially precarious, foreign for-profit company with no higher-education experience. “The cover-up continues,” said Dr. Jeffrey Halpern of the AAUP.  “Make no mistake this hastily put together entity is nothing more than a shell company whose purpose is to provide cover for a for-profit corporation to acquire a very valuable property to add to its portfolio,” he added.
 
Having only recently filed for incorporation on May 1, 2018, the Westminster Choir College Acquisition Company cannot claim to be a not-for-profit because it has yet to receive tax-exempt status from the U.S. government as a 503(c)(3).  
 
WCCAC is in fact a shell company, wholly controlled by the for-profit Kaiwen Education, which provided the funding and named its three corporate trustees. Two of those trustees, Qi Dong and Yu Shi, are directors of Kaiwen Education and their listed address is identical to the corporate headquarters of Kaiwen Education (30 Anli Road, Yangshen Park, Building No 5, Chaoyang District, Beijing 100101). 

Regarding the claim Kaiwen Education “is a well-funded, dynamic entity, financially healthy,” its stock trades at 13.99 RMB, the equivalent of $2.04 US, which equates to a highly speculative “penny stock.”  Kaiwen has shown a profit for only one quarter of the previous nine and that was due to a one-time non-recurring event. Halpern added “The truth is Kaiwen Education has never shown a profit from its core activity and there is no reason to believe it will do so in the future.”
 

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Announcement(s) from Westminster Choir College Acquisition Corporation, NJ

News Release
Issued By: Westminster Choir College Acquisition Corporation, New Jersey
Contact: Larry Livingston, Interim President, wccprinceton@gmail.com 
 
Westminster Choir College Acquisition Corporation Has Been Established
Larry Livingston is Named Interim President
 
Princeton, NJ – Kaiwen Education (Kaiwen) is pleased to have entered into a binding agreement with Rider University to keep Westminster Choir College (WCC) in Princeton, New Jersey.  Rider University plans to continue to operate WCC until June 30, 2019, and Westminster Choir College Acquisition Corporation (WCCAC), a New Jersey non-profit corporation, has been established to assume the operation of WCC when the transaction is complete.  Mr. Larry Livingston has been appointed as the Interim President of WCCAC. 

While a variety of educational institutions were considered possible candidates for partnership with Kaiwen in the United States, Westminster Choir College provided a unique and compelling opportunity.  Renowned for its choral programs and its preeminence in general, WCC represents the commitment to excellence embedded in the philosophy and development of Kaiwen’s international education programs.  

Headquartered in the Haidian District of Beijing, Kaiwen Education presently operates two prominent K-12 schools for serious and talented youth. Several more international school campuses are in the planning stages.  Based on the premise of educating young people to become open-minded, inquiring, courageous, reflective, principled, and caring citizens, Kaiwen focuses on humanities, science, arts, and sports.  Believing that quality is a priority, Kaiwen and its schools maintain the highest standards.  Kaiwen stresses the equal importance of educating the mind and training the body.  In support of that philosophy, Kaiwen campuses feature exceptional facilities for athletics and music performance.
Kaiwen’s vision is to sustain and grow WCC’s reputation as a world-class music school, while maintaining it as an artistically pre-eminent, academically rigorous, and fiscally sound institution.  The historical programs of WCC will be substantially maintained in Princeton.  Kaiwen imagines that WCC will be even stronger, more well known, more selective, and further enriched by the presence of an outstanding international student body.  Lest this concept be misconstrued, the goal is to achieve an optimal mix and balance between domestic and international students on campus. Without question, Kaiwen’s decision was based on its respect for and unalterable desire to help sustain WCC’s culture as an American institution. 

In January, Larry Livingston was hired as Project Manager for the transaction process.  Mr. Livingston, formerly Vice President of New England Conservatory of Music, Dean of the Shepherd School of Music at Rice University, and Dean of the Thornton School of Music at the University of Southern California, brings an impressive, twenty-five year track record as a music school administrator.  
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Now, with the establishment of the Westminster Choir College Acquisition Corporation (WCCAC), and in light of the pivotal nature of his efforts, the Board of WCCAC is pleased to announce that Mr. Livingston has agreed to assume the role of Interim President of WCCAC.   In order to fulfill this assignment, Mr. Livingston will work closely with Dean Marshall Onofrio and all other WCC constituents to secure all regulatory approvals and meet other goals.  Under their stewardship, WCCAC expects to bring the transaction to a mutually satisfactory and desired conclusion. 

Kaiwen is proud to partner with WCC.  For Kaiwen Education, no quest nor dream is seen as more noble or worthy.  And it is prepared to devote its power, acumen, and resources to assure WCC a brilliant future.
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News Release
Issued By: Westminster Choir College Acquisition Corporation, New Jersey
Contact: Larry Livingston, Interim President, wccprinceton@gmail.com 
 
KAIWEN EDUCATION TO JOIN ARMS WITH WESTMINSTER CHOIR COLLEGE
 
PRINCETON, NJ – Kaiwen Education (Kaiwen) is pleased to have entered into a binding agreement with Rider University to keep Westminster Choir College (WCC) in Princeton, New Jersey.  Rider University plans to continue to operate WCC until June 30, 2019, and Westminster Choir College Acquisition Corporation (WCCAC), a New Jersey non-profit corporation, has been established to assume the operation of WCC when the transaction is complete.  

Of central importance in this new enterprise is the fiscal health and strength of Kaiwen and WCC. Despite its renown and undisputed role as a leader in the training and education of aspiring young musicians, WCC has been constantly challenged financially.  Although WCC has been blessed with an endowment of nearly US$20 million and is the beneficiary of generous gifts from alumni and loyal supporters, rising operational costs coupled with declining enrollment have made it difficult to achieve a balanced budget.  Working together with all WCC constituents, Kaiwen is determined to help WCC improve its fiscal health through a variety of initiatives, including a major financial commitment, enrollment expansion, reinvigorated fund raising, and, not least, cost discipline.  

Selected by Rider University among approximately 280 candidates after a thorough and exhaustive due diligence process, Kaiwen Education is a publicly traded enterprise listed in the Shenzhen Stock Exchange of China.  Kaiwen’s corporate governance, business, and financial activities and metrics meet rigorous standards as a listed company.  Kaiwen’s financial activities and data are fully disclosed, open to public review, and are completely transparent as required by applicable law and regulations. 

The following information presents the true profile and financial standing of Kaiwen Education.

1)Kaiwen’s sole primary business is education and related activities. It is not in the steel bridge structure fabrication business.

2)Jiangsu Zhongtai Bridge Steel Structure Co. (Zhongtai Bridge), a company in the steel bridge structure fabrication business, was owned by different shareholders and run by different management team at a different domicile location (Jiangsu Province), until Kaiwen’s major shareholders became the controlling shareholders of Zhongtai Bridge in July 2016.

3)Since Kaiwen’s shareholders took over the then Zhongtai Bridge in July 2016, the stock has appreciated 50% from RMB 9.33 to its recent value of RMB 13.99  - a significant long-term value creation.

4)Kaiwen’s shareholders have planned, constructed, and built from scratch two prominent K-12 international schools in Beijing.  They have never purchased any of those schools.  

5)Kaiwen promised and reported positive profit and positive per-share earnings in 2017.

6)Even with the most conservative calculation, Kaiwen had a debt to equity ratio of .53 in 2016, and .42 in 2017, which compares very favorably with most firms.

7)Kaiwen had an extremely low long-term debt to equity ratio of .062 in 2016.

8)Kaiwen had a long-term debt to assets ratio of .34 in 2016, which aligns with industry norm.

9)Among all seven security brokerage firms who currently track Kaiwen stock, one of them has a “strong buy” rating on Kaiwen stock, and the other six, a “buy” rating – a clear indication of strong investor confidence and interest in Kaiwen stock.

10)Firms at their launch and growth stages typically experience net cash outflows. This was the case for Kaiwen in the past two years. It took significant investments for Kaiwen and its shareholders to construct, build, and launch two magnificent international schools with total enrollment capacity of 4,700 students at attractive locations in Beijing.

11)In Kaiwen’s planning, it typically takes 3-4 academic years for a brand-new campus to reach its maturity and produce significant net cash inflows.

12)The RMB 1.7 billion yuan fundraising and inflow by Kaiwen in 2016 was a transparent and legal transaction with the approval by the China Securities Regulatory Commission (CSRC) and full disclosure to the public. 

13)Kaiwen has recently announced its plan to issue additional stock shares to raise approximately RMB 1,000 million (approximately US$153 million).  In keeping with a historical pattern of support from its shareholders, Kaiwen has received an enthusiastic commitment from its principle shareholder to participate in this offering. 

14)Kaiwen has access to ample funding sources, including but not limited to the following:

     a) Cash on hand of RMB 165 million (approximately US$25 million)
     b) A three-year line of credit from the major shareholder of RMB 2,000 million (approximately US$291 million)
     c) An ongoing stock offering of approximately RMB 1,000 million (approximately US$153 million) (see point 13 above)
     d) A fifteen-year line of credit from the Industrial and Commercial Bank of China, the largest Commercial bank in China, of RMB 1,300 million (approximately US$199 million)
 
All of these funding sources have been fully disclosed and are transparent to the regulators and the public.

Clearly, Kaiwen is a well-funded, dynamic entity, financially healthy and therefore ideally positioned to help WCC grow and flourish. Kaiwen understands the magnitude of this moment and takes very seriously this remarkable, unprecedented opportunity to bring WCC to an even greater future.  While many challenges lie ahead with respect to a successful future for WCC, the financial capacity of Kaiwen is not one of them.  

Although Kaiwen Education has limited experience in higher education, an abundance of higher education expertise is widely available both within the WCC community, as well as domestically and globally.  Kaiwen knows the importance of partnering, leveraging and retaining the best available talents and resources in its business endeavors. It will continue to engage experienced consultants and advisors in this partnership with WCC.
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Kaiwen is proud to partner with WCC, one of America’s great music schools.  Such a historic venture brings together an outstanding music institution with a strong and highly motivated international partner.  In the context of an ever-shrinking planet, Kaiwen is passionate about making this international moment a global success story.  Well aware of the challenges and new terrain that it is facing, Kaiwen will work assiduously with all WCC constituents to build on WCC’s tradition of excellence as an educator of musical and artistic leaders.  For Kaiwen Education, no quest nor dream is seen as more noble or worthy, and it is prepared to devote its power, acumen, and resources to assure WCC a brilliant future.
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