TAL Education Group (TAL), a company providing K-12 after-school tutoring services in the People’s Republic of China, has declined 5.68% during aftermarket trading sessions. Consequently, TAL stock is trading at $4.15 at the time of the writing. The decline is attributable to the business update released by the company. On Friday, TAL closed the day at $4.40 after increasing 3.04% during the mid-day session.
Why TAL Declining?
On 12th November, TAL provided the business update. The updates came in response to the regulatory developments related to after-school tutoring in PRC. The company said that it plans to cease offering academic subjects to students from kindergarten through grade nine in compliance with the rules and regulations. The company expected that the caseation of operations would hurt the financials of the company in the current and upcoming fiscal year. The company said that it would continue to operate the portion of its business that is not related to K9 Academic AST Services.
On 24th September, TAL announced that the Board of Directors of the company had appointed Dr. Alex Zhuangzhuang Peng as the Chief Financial Officer of the company. Dr. Alex was serving as Vice President of Strategy before becoming CFO. The appointment became effective from 1st November 2021. He was to replace Dr. Rong Luo, who decided to resign from the position to pursue another opportunity. Dr. Luo was to serve as the senior consultant to the company, even after his resignation.
Definitive Agreement for Notes Repurchase
On 27th August, TAL announced that the company had entered into a definitive agreement with the holders of its existing 0.50% Convertible Senior Notes due 2026. The agreement was intended for the repurchase of 2026 notes. The aggregate purchase price for the Repurchases was to be an amount of cash equal to the sum of (i) $2.3 billion, the aggregate principal amount of the 2026 Notes, and (ii) accrued and unpaid interest calculated based on an interest rate of 0.50% per annum. It was expected that the repurchases would be consummated in one or more closings by the end of December 2021.
Future Outlook for TAL
Being a company facing the consequences of tough regulations of the Chinese regime, TAL stock has declined more than 90% during the last six months. Analysts believe that the implementation of such regulatory measures by the Chinese authorities further in the future would have a massive impact on the financial stature of companies like TAL.