The British Columbia supreme court approved the transaction yesterday for CIBT to acquire KGIC’s operating educational institutions, two months after it had acquired just over CAN$12m of the company’s debt.
The acquisition will see the company’s language schools and business colleges integrated into CIBT’s existing operations.
“KGIC management and school personnel have endured an extended period of financial hardship”
KGIC’s assets, as of January this year, comprised of 18 campuses in British Columbia and Ontario, under 10 different brands, including language schools, business colleges and career training programmes.
Due to the company’s rapid expansion, “KGIC had outpaced its ability to maintain a competitive position in the market and was no longer able to meet its financial obligations”, according to a statement from CIBT Education Group.
At the end of January, CIBT Finance, a subsidiary of CIBT Education Group, announced it had bought $12.3m of KGIC’s total debt, for $3.1m.
The entirety of the debt exceeded $42m, and CIBT did not acquire any of the outstanding debts following this transaction.
Toby Chu, president, CEO and chairman of CIBT Education Group, told The PIE News there was a need to consolidate KGIC’s various brands to “create camaraderie, synergy and bonding between the various schools and their staffs”.
“When former KGIC schools were marketed as 10 different brands, the cost was high, and they competed against each other.”
The language schools under the brands of KGIC, PGIC and SEC will be consolidated with CIBT’s existing language school, VIC Vancouver International College, and will operate under the name Sprott Shaw Language College.
The new additions will work with Sprott Shaw College, CIBT’s vocational arm, and other CIBT partner schools to develop college pathway programmes.
KGIC’s career and technological training programmes from MTI College in British Columbia will also be combined into Sprott Shaw College.
Meanwhile, its business colleges including KGIBC, UCCBT and VIA will join Sprott Shaw College’s international division – SSCi. This international arm has seen international student enrolment increase by 1,000% since 2008.
CIBT has already been involved in the restructuring of KGIC’s assets as one of its subsidiaries, Sprott Shaw Degree College Corp, was selected by the court-appointed receiver, BDO, to oversee KGIC’s assets during its period of receivership.
This month, three of KGIC’s schools in Toronto closed, as part of the restructuring that took place during the receivership process.
One of which, Cornerstone Academic College’s assets however, were not acquired.
Chu said the company looked at the lease expiry terms, number of students at each school, and “determined the most efficient way to reduce redundancies, and minimise the impact to the least number of students.”
“For Cornerstone, we organised the transfer of students to other schools with supervision and guidance by regulators. No abandonment or midnight closure,” he said.
The integration with CIBT will take place over three months. Human resources, technology, administrative support and executive management will all be consolidated and integrated with CIBT’s schools.
“The swift and precise execution of key measures helped us to ensure the welfare of students, employees, partners and other stakeholders”
“During the past two years, KGIC management and school personnel have endured an extended period of financial hardship creating tension in dealings with suppliers, creditors, students and their parents,” said Chu in the statement. “Upon closing of the asset purchase, we will work to rebuild the confidence of those parties in the coming months.”
The move will grow CIBT’s assets in Canada to total 16 domestic business colleges, six language schools, three international business colleges and one high school.
Overall, CIBT owns and operates 32 schools in Canada and abroad, and seven student housing properties.
With the addition of KGIC enrolments, CIBT’s total student numbers now exceed 15,000, of which around 65% are international students, and 35% are domestic.
“Our schools offer in excess of 150 programmes,” said Chu. “And we project that annual enrolment [prior to the acquisition] will grow from 8,000 to 20,000 students in the next 24 months.”
The acquisition of KGIC also triples the size of its student pipeline to the company’s student housing properties, according to the statement.
The company said it plans to acquire another student accommodation property in Vancouver this summer which will house 330 students.