RYB Education, Inc. (NYSE: RYB) has confirmed that its subsidiaries have inked a termination agreement with certain variable interest entities. The decision of the termination was made after careful review of the regulatory landscape and the Company’s development needs. It has been revealed that after inking a termination agreement, RYB will no longer have contractual control over its directly controlled kindergarten business.
This Divestiture enhances the company’s flexibility to respond to changing industry trends, increase regulatory compliance, grow its product and service offerings, and be a strong sector leader. The present management team will continue to run the divested kindergartens, maintaining stability and the provision of high-quality education to pupils.
Furthermore, the Divestiture seeks to meet all compliance obligations under applicable laws and regulations. RYB Education Inc. will be renamed Gravitas Education Holdings Inc., awaiting authorization at the next extraordinary general meeting. Moreover, this Divestiture includes the dissolution of agreements by and among Beijing RYB Technology Development Co., Ltd (WFOE), Beijing RYB Children Education Technology Development Co., Ltd., and its shareholders.
In addition to this, a total of RMB158.5 million will be provided to its WFOE in installments as compensation for the dissolution of VIE agreements. At the same time, to assure long-term stability and quality kindergarten education, the company’s WFOE has engaged in service agreements with its VIE on an arm’s length basis, based on market prices and conditions.
The Divestiture was reviewed and authorized as a particular transaction at arm’s length by the audit committee of the Company’s board of directors, with the help of a third-party financial advisor. The Divestiture plan was presented to the Company’s board of directors and was accepted on February 21, 2022.