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Fitch slashes Wisdom Education
Fitch Ratings said it downgraded Wisdom Education International Holdings Co. Ltd.'s long-term issuer default rating to B- from BB- and placed the rating on rating watch negative.
The downgrade follows Wisdom's announcement on Dec. 19, it deconsolidated its K-12 schools for the financial year ended August 2021 considering China's “Implementation Rules of the Law for Promoting Private Education,” the agency said.
The rules, which became effective Sept. 1, ban social organizations and individuals from conducting related-party transactions with schools providing compulsory education or from controlling such schools via contractual agreements.
“The downgrade is based on the company's significantly diminished scale and highly fragmented and volatile nature of its remaining ancillary education services business, while the rating watch negative reflects further potential weakening of the company's business profile, depending on its strategy for its remaining businesses. The rating, however, incorporates limited debt and a cash balance for the remaining consolidated business, which indicates reasonable financial liquidity in the short term,” Fitch said in a press release.
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