ATA Creativity Global entered into a subscription agreement on November 17, 2025 to sell 11,067,547 American Depositary Shares, each representing two common shares, at a price of $0.80 per ADS. The transaction is a private placement under the company’s effective Form F‑3 shelf registration and is expected to generate gross proceeds of $8.85 million before underwriting and other fees.
The proceeds will be used for general working capital, a move that aligns with the company’s recent liquidity profile. As of June 30, 2025, ATA’s cash and cash equivalents totaled RMB 34.7 million (about $4.5 million). The new capital injection is intended to shore up liquidity amid a period of tightening margins and declining student enrollment, while also providing a buffer for ongoing operations and potential expansion initiatives. Purchasers, along with the company’s chairman and CEO, have entered into a lock‑up agreement that restricts the transfer of the ADSs until April 30, 2026, helping to stabilize the share price after the offering.
ATA’s Q3 2025 earnings, released on November 12, 2025, showed a 7.1% increase in net revenue for the first nine months of the year, driven by growth in research‑based learning and overseas study counseling services. However, gross margin fell to 39.2% from 44.6% in the prior year, reflecting higher operating costs and a shift in the mix of services. Net income improved to a positive figure, largely due to a one‑time investment gain, but the company still faces a narrowed operating loss. The capital raise therefore supports a company that is improving profitability but still contending with cost pressures and enrollment headwinds.
The offering will dilute existing shareholders, but the impact is modest relative to the company’s total equity base. With 11,067,547 ADSs representing 22,135,094 common shares, the new shares will add a small percentage to the outstanding share count, mitigating the dilution effect. The lock‑up period further limits immediate market supply, which can help maintain shareholder value while the company deploys the funds.
Strategically, the capital raise positions ATA Creativity Global to capitalize on growth opportunities in its core educational services while managing the risks of a competitive market and fluctuating enrollment. Management has emphasized cost discipline and a focus on high‑margin segments, signaling confidence that the additional liquidity will support both operational resilience and selective expansion initiatives. The move reflects a proactive approach to maintaining financial flexibility in a challenging environment.
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