Rider University Chapter of the AAUP
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    • I - Name
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    • Chinese Company Out As Buyer Of Westminster Choir College
    • Kaiwen is Gone
    • Kaiwen Education Reply to a June 2019 Inquiry from the Shenzhen Stock Exchange
    • Update on Kaiwen Education's Financial Status
    • Arbitration Over Layoffs at WCC
    • Kaiwen Education 2018 Annual Report
    • By Federal Reserve Standards Kaiwen Education is a Highly Leveraged and Risky Business
    • Two Updates on Kaiwen's Finances
    • Due Diligence and Kaiwen Education
    • Chronology of a Crisis
    • WCC Reset
    • New Jersey Attorney General’s Office Delivers Major Setback to Rider University’s Plan to Sell Westminster Choir College
    • Westminster Foundation Press Release on AG Investigation
    • Purchase Agreement
    • Faculty Shocked to Learn Secret Agreement Would Allow Buyer to Close Westminster Choir College
    • Universities as the Guardians of Assets
    • Press Release Kaiwen Finances
    • 2019 Report on Kaiwen
    • DejaVuDellOmo
    • Kaiwen Announcement 1/11/19
    • AAUP Goes to the NJ Assembly
    • Sign the Petition to Save WCC
    • WWCAC Letter November 8 2018
    • Kaiwen Education: Report on Company Performance Through the Third Quarter 2018
    • New Information Reveals Chinese Corporation Plans to Take $20 Million Westminster Choir College Endowment despite Prohibitions Imposed by State/Federal Law
    • More Bad News about Kaiwen
    • Claims v. Reality
    • AAUP Challenges Legitimacy of Newly announced Non-Profit Said To Be Created To Run Westminster Choir College
    • Label Your Stuff!
    • WCC Alumni Council Questions and Answers
    • Statement on Proposed Sale of Westminster Choir College Faculty Union Vows to Continue Oppose ill-conceived Sale of Iconic Music School
    • June 7 Letter to Board
    • A Failure of Due Diligence
    • Bond 2017
    • Chronology of the WCC Crisis
    • Kaiwen Education Technology
    • Pending Legal Actions >
      • Legal Complaints against Rider University over Sale of WCC
    • The Legacy of Westminster Choir College
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      • A Letter to WCC Faculty regarding President Dell'Omo's Letter
      • Open Letter to Board of Trustees
      • Letter to Faculty
      • How a For-profit Company Might Ruin Westminster
      • A Message from AAUP regarding the potential layoff of Westminster Faculty
      • ​Update on Westminster
    • Press Releases >
      • Outrage Over Rider University's Plan To Sell Legendary Choir College To Chinese For-Profit Company With No Experience in Higher Education
      • DellOmo Lays Off Entire WCC Faculty
    • WCC Crisis in the News >
      • The Coalition to Save Westminster Choir College Initiates Spin-Off Discussions With Rider University Administration
    • Letters of Support for WCC >
      • Eric Whitacre Praises Westminster
      • Statement of support from NJ Higher Ed Leadership Council.
      • Support for Westminster Choir College
    • Teach In at WCC
    • WCC Teach In Audio >
      • Remarks by Laura Brooks Rice
      • Have American Universities Lost Their Way? by Joel Phillips
    • Governance Standards in Institutional Mergers and Acquisitions
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    • STRIKE FAQ
    • AAUP's Response to Admin's "Critical Need for Change"
    • AAUP v. Admin Proposals
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      • Admin's Prioritization Report
      • WCC Students Petition DellOmo
      • Dr. Sanjay G. Reddy Speaks to the Chapter
      • A Bargaining Unit Member's Guide to Credo Part 1
      • A Bargaining Unit Member's Guide to Credo Part 2
      • Rider AAUP Executive Committee Recommendations Concerning Credo Consulting
      • Administration Attempts to Bully AAUP Executive Committee
      • Save Rider Rally
Due Diligence and Kaiwen Education
Information that has been requested of Rider University by the New Jersey Office of the Attorney General, if provided, will reveal that by mid-November 2017 Rider’s Board of Trustees, heavily relying on PwC (PriceWaterhouseCooper), had completed sufficient due diligence in relation to Kaiwen Education to select this company as Westminster Choir College’s (WCC) potential and future owner.  

The information will show that a major part of the due diligence carried out by PwC was determining whether this potential buyer had the financial resources to meet Rider’s particular needs, and its willingness to retain the professional help in the U.S. necessary to evaluate the purchase, provide legal assistance, and secure the various accreditations and approvals that would eventually be required.

At this point, mainly “reverse due diligence” – evaluation of the opportunity by the buyer - was being carried out by Kaiwen, and the Board was eager for this to be completed quickly. A revised term sheet for the transaction was also under discussion by the parties.

It is important to note that in April 2017, well before November, a draft set of the Guiding Principles, criteria developed by the Board to select Westminster’s future owner, had been distributed to Board members. This draft was identical in every respect to the set of Guiding Principles eventually distributed to the Rider University community in 2018.

Among other requirements, the Guiding Principles indicated that organizations interested in acquiring Westminster were to be evaluated on the ability to provide short- and long-term financial stability for WCC; and on organizational mission, reputation, objectives, student outcomes, accreditations, enrollments, performance statistics, endowment and giving record, and financial resources.

How adequate was Rider’s due diligence? It’s well to keep these Principles in mind as we consider below the state of Kaiwen as a company in November 2017. Here is some of what thorough due diligence would have discovered about Kaiwen at the time from respected and easily available public resources:

  • By November 2017 Kaiwen had operated its Beijing Haidian K-12 school for a little over a year and had an enrollment of about 370 students, 25% of school capacity. The company had just opened its second K-12 school – Beijing Chaoyang - with 248 students (6% of school capacity), though it had predicted it would enroll 1780 students in its first year. By November 2017 Kaiwen would not have graduated a single student, in contrast to many of its many competitors, which had successfully placed their students for years in U.S. colleges and universities, a key Kaiwen goal.
    ​
  • These activities comprised the sum of Kaiwen’s experience in education. While perhaps meeting Chinese K-12 instructional standards in its two schools, the company had no experience whatsoever in higher education and higher education accreditation.

  • In November 2017 Kaiwen was slowly building its business, brand, and reputation, something it claims to still be doing today, according to its recent report to the China Securities Regulatory Commission.

  • Kaiwen had completed its fiscal year 2016, ending December 31, with a net loss of 96 million Yuan on revenues of 316.9 million Yuan – a net loss of 30.3%. 

  • By the end of 2017 Kaiwen would have operated profitably in only one out of the eight previous quarters. It was able to notch a small profit in 2017 in the very last quarter by selling assets from its unprofitable previous business, a business it was eager to leave. Otherwise, it would have had a 20% net loss for the year.

  • Though it was able to divest itself of its previous steel fabrication business in November 2017 the sale required Kaiwen to remain a legal guarantor of that firm’s performance on a series of outstanding contracts. Kaiwen’s liability as a guarantor on June 30, 2018 was 915.2 million Yuan, then 43% of Kaiwen Education’s net worth as a company, calculated by subtracting its total liabilities from its total assets. A portion of this liability (303 million Yuan) currently remains and will continue through 2019.

  • In none of the quarters in 2016 and 2017 did Kaiwen have on hand sufficient cash and cash equivalents to satisfy its current liabilities – short-term debts and accounts payable. Kaiwen’s current liabilities were on average, and remarkably, five times larger than the cash on hand to settle them. For one quarter, current liabilities were ten times larger. These obligations were settled through government subsidies and additional loans, an unsustainable strategy.

The above facts convey only some of the financial vulnerabilities and other shortcomings of Kaiwen Education as a potential owner of WCC in 2017 – a remarkable and unsuitable choice given the criteria that were to be used to select a new owner. Other elements of concern may be found in an AAUP White Paper published in May, 2018. Kaiwen today remains a company in precarious financial condition, facing significant competition and adjusting its business strategy to remain a going concern.
4/29/19

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  • Home
  • About
    • Mission Statement
    • Chapter Meeting Minutes
    • Presentations from AAUP Meetings
    • Meeting Dates 21-22
    • Points of Contact
    • AAUP Officers
    • AAUP Awards >
      • Bertram Mott Award
      • Henry J. Frank Award
    • P&T Committee Members
    • APC Committee Members
    • UAPC Committees
    • Training for College/School Academic Policy Committee Members
    • CIM Training Video
    • Membership
    • Assumption of Risk and Waiver Form for Employees that is required for travel funds
  • Contract
  • Grievances
    • Grievance Process
    • Amendments to Grievance Process, Updated April 2016
    • Grievance Procedure Explained
  • Constitution
    • I - Name
    • II - Purpose
    • III - Membership
    • IV - Dues
    • V - Chapter Officers
    • VI - Committees
    • VII - Election of Officers
    • VIII - Removal of Officers
    • IX - Disciplining of Members
    • X - Meetings
    • XI - Contract Ratification
    • XII - Finance
    • XIII - Amendments
  • Saving WCC
    • Decision on Standing Lawsuit
    • AAUP Response to Provost Fredeen's October 2nd Email
    • Important Information on Campus Consolidation
    • Chinese Company Out As Buyer Of Westminster Choir College
    • Kaiwen is Gone
    • Kaiwen Education Reply to a June 2019 Inquiry from the Shenzhen Stock Exchange
    • Update on Kaiwen Education's Financial Status
    • Arbitration Over Layoffs at WCC
    • Kaiwen Education 2018 Annual Report
    • By Federal Reserve Standards Kaiwen Education is a Highly Leveraged and Risky Business
    • Two Updates on Kaiwen's Finances
    • Due Diligence and Kaiwen Education
    • Chronology of a Crisis
    • WCC Reset
    • New Jersey Attorney General’s Office Delivers Major Setback to Rider University’s Plan to Sell Westminster Choir College
    • Westminster Foundation Press Release on AG Investigation
    • Purchase Agreement
    • Faculty Shocked to Learn Secret Agreement Would Allow Buyer to Close Westminster Choir College
    • Universities as the Guardians of Assets
    • Press Release Kaiwen Finances
    • 2019 Report on Kaiwen
    • DejaVuDellOmo
    • Kaiwen Announcement 1/11/19
    • AAUP Goes to the NJ Assembly
    • Sign the Petition to Save WCC
    • WWCAC Letter November 8 2018
    • Kaiwen Education: Report on Company Performance Through the Third Quarter 2018
    • New Information Reveals Chinese Corporation Plans to Take $20 Million Westminster Choir College Endowment despite Prohibitions Imposed by State/Federal Law
    • More Bad News about Kaiwen
    • Claims v. Reality
    • AAUP Challenges Legitimacy of Newly announced Non-Profit Said To Be Created To Run Westminster Choir College
    • Label Your Stuff!
    • WCC Alumni Council Questions and Answers
    • Statement on Proposed Sale of Westminster Choir College Faculty Union Vows to Continue Oppose ill-conceived Sale of Iconic Music School
    • June 7 Letter to Board
    • A Failure of Due Diligence
    • Bond 2017
    • Chronology of the WCC Crisis
    • Kaiwen Education Technology
    • Pending Legal Actions >
      • Legal Complaints against Rider University over Sale of WCC
    • The Legacy of Westminster Choir College
    • Updates and Information Sent to Faculty from AAUP Leadership >
      • A Letter to WCC Faculty regarding President Dell'Omo's Letter
      • Open Letter to Board of Trustees
      • Letter to Faculty
      • How a For-profit Company Might Ruin Westminster
      • A Message from AAUP regarding the potential layoff of Westminster Faculty
      • ​Update on Westminster
    • Press Releases >
      • Outrage Over Rider University's Plan To Sell Legendary Choir College To Chinese For-Profit Company With No Experience in Higher Education
      • DellOmo Lays Off Entire WCC Faculty
    • WCC Crisis in the News >
      • The Coalition to Save Westminster Choir College Initiates Spin-Off Discussions With Rider University Administration
    • Letters of Support for WCC >
      • Eric Whitacre Praises Westminster
      • Statement of support from NJ Higher Ed Leadership Council.
      • Support for Westminster Choir College
    • Teach In at WCC
    • WCC Teach In Audio >
      • Remarks by Laura Brooks Rice
      • Have American Universities Lost Their Way? by Joel Phillips
    • Governance Standards in Institutional Mergers and Acquisitions
  • 2022 Negotiations
    • Negotiation Updates
    • STRIKE FAQ
    • AAUP's Response to Admin's "Critical Need for Change"
    • AAUP v. Admin Proposals
    • CREDO >
      • Admin's Prioritization Report
      • WCC Students Petition DellOmo
      • Dr. Sanjay G. Reddy Speaks to the Chapter
      • A Bargaining Unit Member's Guide to Credo Part 1
      • A Bargaining Unit Member's Guide to Credo Part 2
      • Rider AAUP Executive Committee Recommendations Concerning Credo Consulting
      • Administration Attempts to Bully AAUP Executive Committee
      • Save Rider Rally