Interac: a major shareholder retired?

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.

7 thoughts on “Interac: a major shareholder retired?

  1. The more I read your blog, the more I can’t believe you’re against JET. We both agree it needs lots of reform, but so does just about every government institution on this Island.

    A simple law requiring any person working in a Japanese school to be an extension of a government program, fully covered with benefits and year to year contracts, would solve the problem of exploitative dispatch companies. One could be JET, which would be a focus on youth and exchange, and the other could be Teach For Japan, with an emphasis on Japan related-experience, leadership skills and career development, ideally with some outside recruitment, but mostly the former feeding into the latter.

    The answer is OBVIOUSLY not to abolish JET, it[‘]s to expand it.

    1. OK fine, let’s look at that. A JET and a TfJ. But you see what the problem is going to be? JET will be the feeder into TFJ, and those that have JET are going to have a leg up. Someone will come along and arrange something where other young people (and notice English teaching here is mostly all about hiring young people) will be sent into the government, and then reassigned over to teach.

      What is the problem of simply having Teach for Japan, and rolling any current JETs or the recruiting apparatus into that? Whatever “good” JET is doing for international relations is washed away by all the bad going on in the unregulated Dispatch ALT system.

  2. It just sounds like you know nothing about what happens to JETs when their 5 year limits expire and they have to compete for direct hires.

    No they won’t have a leg up. JETs for example who only stay a few years will not have a leg up. JETs who never passed language proficiency requirements will NOT have a leg up. JETs with no formal teaching education will not have a leg up. JETs who don’t receive exemplary letters of recommendation from both their Base school and BOE will not have a leg up.

    The standards of course for TfJ would be very high, with the ideal JET applicant completing 5 years on JET and obtaining proper experience and credentials applicable to a lifetime career in ESL backed by the government.
    The other TfJ applicants would be filled on a case by case basis ( as would the JET applicants) based on similar qualifications. For example, someone who worked with Interac for a comparable amount of time and presents similar recommendations, or someone from America or England who demonstrates equal ESL teaching credentials and Japanese language ability. The bottom line of course being that Teach for Japan would NOT hire people with inadequate TEACHING experience.

    As for completely eliminating JET and replacing it with TfJ, AGAIN, what does that amount to except a changing of acronyms? What you’re advocating is the removal of a system that allows entry level applicants to come to Japan based on criteria other than what I outlined above, providing SOME candidates the ability to get their “foot in the ドーア” of working in Japan. Because you think its “unfair.”

    I don’t think it is. I think that’s life. Unless you’re picking the applicants based on race, gender, or income, there’s just no reason to say its unfair. The reality is there are simply not enough JET positions to give to everyone who applies, so a lot of perfectly qualified people get rejected. It would be the SAME with a Teach for Japan program, just as it is the same for many job programs in the US. Without making these dispatch companies illegal, you’re not solving any problems.

    We’re arguing about the JET programe again and this blog post is about Interac! Sorry!!!! lol

      1. The answer is OBVIOUSLY not to abolish JET, it[‘]s to expand it.
        Just out of curiousity. Where is the error? It’s is perfectly correct. In other words…it is to expand it.

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