RE:RE:RE:RE:RE:Is there hope for KGIC inc?For the record, I will start off by saying that yes, I am an ex-employee of Loyalist (before they became KGIC Inc.) and I will put my 2 cents in. I know that I will be admonished for being a "bitter ex-employee who probably is angry I lost my job" and truthfully, I am pissed off with the way this company has been run. Every CEO that comes in lays off more people in order to "right the ship" yet, really they seem to put more leaks in the hull. They all seem to treat this as their own personal cash cow. That aside, I will tell you what I know based on my communications with the current staff that I am still in touch with and my knowledge of the industry. Regardless of what you may think of me, I will present the facts as I know them.
First of all, students are largely brought to ESL schools via agents. They are the drivers of the industry and like any industry, some involved are good and fair and others are corrupt and greedy. Agents generally get a commission in a range of 20% (very low) to 50% (stupidly high). A school can survive well with 30% commissions. A school cannot survive on 50% commissions. Unfortunately, the schools have been decimated by the senior management and are now offering commissions and promotions that are too high in order to get the students back in the seats of Loyalist schools. Numbers are terribly low and the company is losing substantial money every month.
Money is scarce at the schools and they are constantly putting out the fires of those that are demanding money; this includes agent commissions, student refunds, homestays, rent payments and various vendors.
The lack of staff has made it difficult to run the schools properly. As I understand, the schools are running with skeleton crews of inexperienced staff as most of the valuable experienced staff have left or been laid off. Most employees do the jobs of two or three people and are frustrated and tired
The current CEO has indeed hired a consulting company to manage the marketing of the company. This company goes by the name of Reicura and the president, funnily enough, shares the same last name as the current CEO. I have never heard what they are being paid. I also do not know how well they know the industry.
The ex-CEO, Mr. Andrew Ryu, who got everybody into this mess in the first place, is back at Loyalist and calling some of the shots. He has personally put in a new marketing director for Loyalist.
Frankly, I would love to see this ship righted, but I don't see how this will happen. The damage that has been done to the individual schools is significant and the great relationships that they had with agencies have become mostly null and void. The student numbers are low; it is hard to run a business without a good revenue stream, which brings me to my final point, the numbers.
Why are the numbers so far behind? Do you remember the last time the numbers were late? Loyalist showed a 19 million dollar loss and the stock dropped 80% in two days. Do you think that the numbers coming will be good? Could it be that the numbers are being held back so that Loyalist can get enough investors to purchase the 5 million in debentures? Could it be that if the numbers came out, no one would touch this 'speculative' investment? I honestly don't know.
Like Banx said, this is a speculative investment and should the company execute a miraculous turnaround, then those that held on or bought at the current price will be laughing all the way to the bank, but I don't see that happening. What has this new CEO done that the others haven't? Cut staff? Done by all previous CEOs. Reduced costs through cutting services? Done by all previous CEOs. Maybe senior management could take a pay cut to help save costs...A small pay cut across the senior managment board could help to pay bills and hire some more staff that is so desperately needed.
To those of you that are serious investors and are in this for the long haul (Banx and mabye 606060), I wish you all the best. To those that just slam those who may have some potentially useful information, even if they are disgruntled and upset, maybe you should take a step back and consider whether the information that they post might actually have some merit.