An Open Letter to Shareholders from Dr. Jin Huang, Chairwoman and CEO, Ambow Education Holding Ltd.

 An Open Letter to Shareholders from Dr. Jin Huang, Chairwoman and CEO, Ambow
                            Education Holding Ltd.

PR Newswire

BEIJING, June 24, 2013

BEIJING, June 24, 2013 /PRNewswire/ -- Ambow Education Holding Ltd. (NYSE:
AMBO)has issued the following open letter to its shareholders from Dr. Jin
Huang, Chairwoman and CEO of the Company:

My Fellow Shareholders:

As you have seen, the Grand Court of the Cayman Islands issued an order on
June 7, 2013 appointing members of KPMG as provisional liquidators of the
Company, which immediately turned control of the Company over to the
provisional liquidators and marked an important turning point in the history
of the Company. I am writing this open letter to shareholders in order for you
to make informed decisions about your investment in Ambow and to open a
dialogue that will be needed to ensure a promising future for the Company and
the value of your shares.

The Facts about Ambow

Many rumors have circulated regarding the Company and the status of various
important inquiries that it is the subject of. As investors, you are entitled
to transparency and good governance and we are committed to providing you
accurate, current information in this regard:

Cash position. As a result of our recent financing transaction with SummitView
Investment Limited, a strategic and well-connected investment fund, some
parties have questioned our liquidity and working capital position. Prior to
the issuance of the order of the Grand Court, the Company had ready access to
cash and cash equivalents on deposit in major banks in the People's Republic
of China and available lines of credit more than sufficient for its current
and future needs. In addition, as announced on June 7, 2013, we recently
secured the strategic cooperation of the prestigious Bank of Beijing regarding
the establishment of further credit lines and comprehensive financial
services.

Rationale for Financing. The SummitView transaction was also the subject of
speculation regarding the terms and purpose of the financing. We engaged in
the deal with SummitView due to the resignation of certain directors of the
Company resulting in a non-financial covenant having been triggered and the
lender's resulting ability to require early repayment. By accepting
SummitView's equity investment to replace debt, we not only added another
sophisticated financial institution to the list of those who have examined and
validated our business model and governance structure, but improved our debt
to equity ratio.

Fraud. Many bloggers and market players have questioned whether Ambow is one
of the PRC-based businesses which make false disclosures and inaccurate public
filings. In this regard, I can inform you that my belief is the internal
investigation by the international law firm DLA Piper into certain issues
affecting the strength of our internal financial controls is close to
completion and its findings are capable of release should the provisional
liquidators allow DLA Piper to complete this process, although we will need
the final report to be made to the Audit Committee in this regard. I am
confident that a professionally prepared report would contradict any unfounded
rumors regarding the Company.

Moreover, we were the subject of many years of audits conducted by a Big Four
accounting firm, extensive due diligence conducted over the course of years by
highly sophisticated investors, investment banks and law firms without any of
these parties raising any concerns regarding our transparency or the accuracy
of our public disclosures.

Status of the Audit. We are currently completing the final stages of the audit
required to file our Annual Report on Form 20-F with the SEC, subject only to
the completion of the internal investigation.

What is at Stake

For you, as public shareholders, there is a significant risk to your
investment posed by the Grand Court's order. The investors who filed the
petition seeking the winding up of the Company are led by Avenue Capital.
Avenue Capital is a private equity fund that is not constrained to holding
only public company shares – in other words, they target returns generated by
holding private company shares and then driving a significant liquidity event
– and this type of fund typically can hold private company shares for as long
as ten years before seeking an exit.For this basic reason, their interests
and your interests as public shareholders are not aligned, and their goal will
be to buy out the public shares in Ambow at a steep discount to their true
value, only to benefit upon the relisting or sale of the Company in a better
market.Public shareholders, however, would not participate in such a
liquidity event and would be forced to sell their shares at the price these
private equity funds acquired the company.In our case, these sophisticated
investors have sought to file for liquidation, which could be to wind up the
Company (leaving little upside for them) or more likely to benefit from a
steep decline in value that would occur if a liquidation is imminent and
accrue to their benefit when the public shareholders sell their shares at
those prices and then profit upon the sale or relisting in a better
market.The facts that this private equity fund still owns shares, has never
sold them to date and recently initiated the Cayman Islands petition process
with only two private equity firms in support, would strongly suggest that
this may be their strategy. This is further evidence that our Company has
significant value (or at least they believe so) or they would not be still
allocating the significant resources required in their attempt to wrest
control of the company.As a fiduciary to the public shareholders, I cannot
allow one minority group of financial investors to realize a significant
profit at the expense of all the public shareholders.

Moreover, even for those private shareholders who may have the opportunity to
participate in taking the Company private, much risk is presented by the
actions of these private equity funds.The order issued by the Grand Court on
June 7 has raised significant concerns among the education authorities in the
PRC, the school administrators and innocent students regarding the stability
of the Company and its operations. As a result of my experience in viewing the
actions of these constituencies in other situations, I am very worried that
these events could have a significant impact on the operations of the Company
and it is unclear to me what steps the relevant government authorities might
take in this regard.

What I did Wrong and How We Can Still Participate in a Turnaround

Since taking Ambow public, I have learned much.Having spent most of my career
focused on execution in a private company context, I was under-prepared for
the demands of managing our relations with investors, building investor
confidence in the organization's governance culture and preserving regular
dialogue with Wall Street analysts and shareholders. I also did not act
quickly enough once market confidence in the Company and my team began to
decline, which was compounded by resignations and market-moving events
affecting many companies in our industry segment.

On the other hand, I am still one of the largest shareholders of the Company
and to date have not sold a single share of my holdings.While many other
CEO's have adopted "10b5-1 plans" and other means of monetizing their company
positions, I have preserved my commitment to Ambow and my long-term interests
remain aligned with yours.

We have no desire to engage in a war with opportunistic private equity funds
with vast resources and an investment focus that may not be aligned with all
of our shareholders', and we certainly have no desire to destroy the Company
we worked so hard to build. In fact, I sought to reconcile all outstanding
issues with Avenue before the order was issued by the Grand Court and have
consistently recommended that the governance dispute be the subject of an open
vote of the Company's shareholders.

In sum, I am open to finding a solution that accommodates the legitimate
concerns of shareholders so long as our business operations are not adversely
affected.While my continued leadership as CEO has been challenged several
times, I have retained this job only for two important reasons – I am
responsible for the continued welfare of the thousands of full and part-time
employees of Ambow and hundreds of thousands of students receiving our
services.Secondly, many of the licenses in the PRC and critical relationships
with government officials, lenders and business partners are based on my
involvement with the Company, which cannot be jeopardized to suit the whims of
one investor group's investment thesis. As one of the largest shareholders of
Ambow, I need to take those actions which are prudent to continue the growth
of the Company and I care about the value of my shares just as you do. If I
saw there was another feasible option which I believed could increase the
value of my shares, I would consider it.

The path I see as most beneficial to the mutual interests of all shareholders
involves:

  oAchieving a consensus among the factions within the Company that the most
    important focus of our efforts is to mitigate the anxiety of the education
    authorities and students regarding the future of the Company
  oCo-operate with the provisional liquidators in compliance with the Grand
    Court'scourt order, hoping that they will acknowledge, understand and work
    with comments of management that founded the company and operated it for
    the past thirteen years
  oStabilizing the team within the Company and ensuring continued smooth
    operations of the education business
  oCompletion of the Internal Investigation and FY 2012 audit
  oFiling of 20-F with the SEC
  oResumption of NYSE trading of our ADSs
  oOpening the board to new independent candidates to add new voices and
    perspectives, unconnected to the deadlock of earlier this year and its
    adverse consequences (auditor resignation and trading halt)
  oContinued growth in the education business and opportunistic partnering
    with high-quality profitable operations in the PRC

We believe that these issues should be resolved by you, and we hope that the
issues facing the Company can be the subject of an emergency general meeting
of shareholders so that the decision makers can hear the voices of all
shareholders. We believe that liquidating the Company, or turning it over to
the private equity funds seeking to profit to your detriment, is clearly not
in the best interests of all shareholders and public shareholders in
particular.As the founder of Ambow, I will continue to fight for the best
interests of the shareholders, and we ask for your support.

Respectfully,

Dr. Jin Huang

For investor and media inquiries please contact:

Ms. Annie Wang
Investor Relations
Ambow Education Holding Ltd.
Tel: +86-10-6206-8042
Email: ir@ambow.com

SOURCE Ambow Education Holding Ltd.
 
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