BEIJING, Dec. 1, 2021
/PRNewswire/ -- RISE Education Cayman Ltd ("RISE" or the "Company")
(NASDAQ: REDU), today announced that on December 1, 2021, the Company, Wuhan Xinsili
Culture Development Co., Ltd. (the "Buyer SPV"), Rise (Tianjin) Education Information Consulting Co.,
Ltd. ("WFOE"), Beijing Step Ahead Education Technology Development
Co., Ltd. ("VIE"), RISE Education International Limited ("Rise HK")
and Rise IP (Cayman) Limited ("Rise IP") entered into a purchase
agreement (the "WFOE Purchase Agreement"). The Buyer SPV is a
newly-formed limited liability company controlled by the buyer
consortium (the "Buyer Consortium") consisting of certain
franchisees of the Company and an affiliate of the Company's senior
management, who are PRC nationals.
Pursuant to the WFOE Purchase Agreement, the Company has agreed
to, through Rise HK, sell all of the equity interests in WFOE to
the Buyer Consortium (the "WFOE Sale"), in consideration of the
Buyer Consortium (i) paying to Rise HK a nominal consideration, and
(ii) assuming all liabilities of WFOE and its subsidiaries.
Conditions precedent to the WFOE Sale include, among others, (i)
Rise HK and Rise IP shall grant WFOE or other entities designated
by the Buyer Consortium a royalty-free, perpetual, irrevocable and
exclusive license over all intellectual property rights owned by or
licensed to Rise HK and/or Rise IP, (ii) the Company shall make an
additional capital contribution to WFOE in US dollars equivalent of
RMB20 million, and (iii) the lenders
(the "Lenders") of the facilities agreement dated March 18, 2021 relating to the term and revolving
facilities of up to an aggregate amount of US$80,000,000 (the "Facilities Agreement") shall
have released the applicable guarantees, obligations and equity
pledges provided by WFOE and VIE. In addition, the Buyer SPV and
its affiliates warrant that they will have no less than
RMB100,000,000 at the closing of the
WFOE Sale to fund the business operations of WFOE and its
subsidiaries after completion of the Sale.
On the same day, the Company entered into a share purchase
agreement (the "IP Holdco Purchase Agreement") with Rise Education
Cayman I Ltd (the "IP Seller") and Bain Capital Rise Education IV
Cayman Limited, a major shareholder of the Company (the
"Shareholder"). The IP Seller is also the borrower (the "Borrower")
under the Facilities Agreement. Pursuant to the IP Holdco Purchase
Agreement, the Company and the IP Seller have agreed to sell all of
the equity interests in Rise HK and Rise IP to the Shareholder in
consideration of the Shareholder (i) on behalf of the Borrower,
paying US$2,500,000 to the Lenders in
settlement of the Facilities Agreement, and (ii) causing Rise HK
and Rise IP to grant WFOE or other entities designated by the Buyer
Consortium a royalty-free, perpetual, irrevocable and exclusive
license over all intellectual property rights owned by or licensed
to Rise HK and/or Rise IP (the "IP Sale", and together with the
WFOE Sale, the "Sale"). The IP Sale is subject to, among other
customary conditions precedent, the completion of the WFOE
Sale.
In connection with the Sale, the Borrower, WFOE, VIE and the
Shareholder and certain other parties entered into a settlement
agreement (the "Settlement Agreement") with the Lenders on
December 1, 2021. Under the
Settlement Agreement, the Lenders agreed to (i) acknowledge and
consent to the Sale, (ii) discharge and release all liabilities and
obligations of the Company and its subsidiaries under the
Facilities Agreement in the amount of US$55,746,367.04; (iii) terminate, release and
discharge all security interest, guarantee and indemnity created in
connection with the Facilities Agreement; and (iv) waive, release
and discharge all claims arising from or in connection with the
Facilities Agreement, in exchange for (i) an aggregate amount of
US$10,377,972.06, and (ii) the
transfer of all interest in the Edge business (the "Edge Business")
that offers admission consulting, academic tutoring and test
preparation services in Hong Kong
and Singapore for students who
intend to study abroad to a person nominated by the Lenders,
and the obligation of the Borrower and the Shareholder to use their
respective reasonable endeavors to run and manage the sale of the
Edge Business to a third party for the 12 months following
completion of the settlement contemplated under the Settlement
Agreement (the "Settlement"). The Settlement is subject to, among
other customary conditions precedent, the credit approval for each
Lender, which the Lenders undertake to take all reasonable actions
and steps required to obtain on or before December 17, 2021.
In order for the Company to make the settlement payment under
the Settlement Agreement, make an additional capital contribution
to WFOE pursuant to the WFOE Purchase Agreement and pay for certain
operating expenses, the Company entered into a convertible loan
deed with the Shareholder on December 1,
2021 (the "Convertible Loan Deed"), pursuant to which the
Shareholder will provide an interest-free convertible loan of
US$17 million to the Company for a
period of 360 days, convertible into ordinary shares of the Company
at US$0.35 per share, or US$0.70 per ADS, representing a premium of 10%
over the volume weighted average closing price of the Company's
ADSs (each representing two ordinary shares) published on the
relevant page on Bloomberg that shows such price on each day for a
period of ten trading days prior to the date of the Convertible
Loan Deed (the "Convertible Loan"). In addition, at any time prior
to the date falling 30 days after the date of the Convertible Loan
Deed (the "Solicitation Period"), the Company has the right to
solicit and raise alternative financing and prepay any drawn
portion of the Convertible Loan and cancel any undrawn portion of
the Convertible Loan in full with proceeds from such alternative
financing. The Shareholder shall not have the right to convert the
Convertible Loan during the Solicitation Period.
Upon completion of the Sale, the Company would have, through its
subsidiaries, sold substantially all of its assets. The Sale is
conditioned upon receiving approval from Company's shareholders.
The Company will convene an extraordinary general meeting of the
shareholders to consider and approve the Sale as described above.
Pursuant to the terms of an irrevocable voting undertaking dated
December 1, 2021 by and between the
Shareholder and the Buyer SPV, the Shareholder will vote all of the
ordinary shares of the Company it holds, or 70,800,808 ordinary
shares representing 62.7% of the voting power of the Company's
outstanding shares, in favor of the Sale at the extraordinary
general meeting of the Company.
The closing of the Sale is not certain. There is no assurance
that all conditions precedent to the closing of the Sale will be
satisfied or waived. The WFOE Purchase Agreement may be terminated
upon mutual agreement among the parties thereto or if the closing
of the WFOE Sale does not take place within three months following
the execution of the WFOE Purchase Agreement. The IP Holdco
Purchase Agreement may be terminated upon mutual agreement among
the parties thereto or if the closing of the IP Sale does not take
place within three months following the execution of the IP Holdco
Purchase Agreement.
For more details of the Sale, please refer the English
translation of the WFOE Purchase Agreement and the complete text of
the IP Holdco Purchase Agreement that will be furnished to the SEC
and be available on the SEC website at http://www.sec.gov.
Safe Harbor Statement
This press release contains statements of a forward-looking
nature. These statements are made under the "safe harbor"
provisions of the U.S. Private Securities Litigation Reform Act of
1995. You can identify these forward-looking statements by
terminology such as "will," "expects," "believes," "anticipates,"
"intends," "estimates" and similar statements. These
forward-looking statements involve known and unknown risks and
uncertainties and are based on current expectations, assumptions,
estimates and projections about RISE and the industry. All
information provided in this press release is as of the date
hereof, and RISE undertakes no obligation to update any
forward-looking statements to reflect subsequent occurring events
or circumstances, or changes in its expectations, except as may be
required by law. Although RISE believes that the expectations
expressed in these forward-looking statements are reasonable, it
cannot assure you that its expectations will turn out to be
correct, and investors are cautioned that actual results may differ
materially from the anticipated results.
For investor and media inquiries, please contact:
Luna Xing
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9191
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SOURCE RISE Education Cayman Ltd