There is more rumor out there, this time in the form of an internal memo allegedly coming from within the company:
To: All instructors
From: Kevin Salthouse, General Manager, Human Resources and Class Management Division
Subject: Response to rumors concerning the financial stability of Interac.
Date: September 26, 2010
Earlier this month, I wrote a message in the ‘Interac-shin’ newsletter announcing that the Selnate Group was re-organizing into a new group under the Interac name. This change will be effective October 1, 2010.
Unfortunately, comments have been made on the forums of some well-known websites this weekend suggesting that Interac may be in financial difficulty or be going bankrupt. I am deeply concerned that such rumors may cause you worry and stress. So, let me categorically state that Interac is financially stable and in absolutely NO danger of going bankrupt. I would like to put an end to such rumors here and now. Nor will the re-organization have any impact on your jobs or working conditions.
It appears that the cause of such rumors was a legal notice placed by us in the Government’s Official Gazette on August 24 2010 announcing that Interac would dissolve on October 1.
This is technically true. Part of the re-organization involves consolidation. Selnate Group companies will be consolidated into one big organization. One of our other group companies AP 18 will assimilate the others as New Interac with the old Interac dissolving. Under Japanese law the new group will simply take over all elements of the previous companies.
In practice nothing will change. For example, the same executive and management team will continue and your contracts and employment status will simply role [sic] into the new company. You remain as Interac employees. Also, the re-organization will in no way affect the existing contracts with our clients. All our clients are aware of the change and understand it.
The other question that has been raised is in regard to the ownership of the Selnate Group. At the beginning of this year the previous main shareholder retired from the group management. At that time, and after careful consideration and consultation with the executive board members, the board approved changing the main shareholder of the Selnate Group to a long-term investment fund managed by Advantage Partners.
As a company Advantage Partners is the largest in its field in Japan with an outstanding reputation for the support that it provides to its portfolio companies.
Its own philosophy is to contribute to society by teaming up with good, profitable organizations that they believe they can assist to grow and become stronger. We all believed that Advantage Partners philosophy fits well with our own and is in an ideal position to help Interac maintain and strengthen its current business and seek new areas of opportunity in the future. Indeed, we are already seeing the benefits of the fresh perspective and management support that they provide.
Since we are unlisted, we have never made the names of its shareholders public but since facts were falsely represented in a public forum, I decided to address this issue with you.
Thank you and if you do have any concerns or questions, please do not hesitate to speak with your management consultant.
H/T to Let’s Japan and a couple other websites.
I like that part about the internet rumors, coming from a company that uses the internet to do business. From the moment I heard about this, it was very hard for me to believe that Interac would be having fianancial difficulties. Again, here is the business model:
1) Stick a young person from an English-speaking overseas country in a Japanese public or private school dispatch role.
2) Collect money from the Board of Education or board of the private school.
3) Pay the young person less than what you collect from the Board of Education.
Easy, ne? A cash cow of sorts. Even if the government would hit you for social insurances that you never contributed to on hundreds of employees, it’s the kind of thing that could be worked around over a few quarters–especially if you are a deep-pocket conglomerate.
You get someone from among the wealthy Utah families connected to the popular church there to front you some money. No reason for anyone to go bankrupt.
If the posted memo is true, then another possibility is that a major shareholder wanted out, because of retirement. But in order to be out, someone has to buy the stake; and that’s where Advantage Partners comes in.
Say I own 60% of a company. It’s a privately held company, so I don’t own stock that I can just sell on the open market. I want out of the company, and so someone has to buy my stake. This is where, maybe, an Advantage Partners comes in. They pony up the fresh capital. I get that capital, and am on my way. Advantage owns what I used to own.
Now the interesting thing there is price. What do I get? If I were Advantage, I would want to buy in at a low price. If I were cashing out, I would want the high price.
Given that there is some talk about finally making the Dispatch ALT companies follow labor law and also pay the social insurances, you can bet that any acquirer wanted those potential liabilities factored into the sales price. (Meaning: they want to pay less, just in the event the company has to pay more later.) So Interac’s potential social insurance liability becomes a plaything for Advantage Partners. If they bought in to Interac at a discount because potentially Interac could be on the hook, they win if they can avoid paying shakai hoken.
Another way Advantage can win is if its ownership interest in the other various businesses can be leveraged to pressure localities to do business with it and New Interac. You want “x”, local government, give us “y”. It will be interesting to see how that works out, too.
As I hinted above, I get tired of these companies that primarily recruit over the internet, do business over the internet, and then cry when the internet community starts discussing things that they hear about those companies. So that also made the memo a delight. “Boo hoo! We use the internet as part of our business model. But then, something gets out there and we can’t put our spin on it beforehand!”
Ron Kessler did the same thing last year with the HealthOne gap insurance business that it well appeared he had a connection to.