Final tally for failed Algonquin College campus hits $9M
Added fee of $2.9M to be used to sever contract with Saudi college group
Algonquin College's failed foray into Saudi Arabia has cost the college almost $9 million to exit the deal, according to a report to its board of governors.
Original estimates projected a $6-million hit, but the college announced at a Dec. 11 meeting that it had taken out a loan for an additional $2.9 million to settle the account.
"This marks the last chapter in our involvement in Saudi Arabia and means that all outstanding claims will now be settled," said Cheryl Jensen, the college's president, in a written statement. "We are now able to move forward."
Last August, Algonquin transferred ownership of the men-only Jazan College, a technical school located in a rural area of southwest Saudi Arabia, to British company Interserve Learning and Employment.
But the financial obligations didn't stop there. Algonquin is still paying the Colleges of Excellence, the group that handled the contract.
When Algonquin opened the school in the Middle East in 2013 under a five-year contract, administrators projected it would generate millions of dollars and would bolster the college's reputation as a leader in international technical education.
The losses began piling up soon after the school opened. Algonquin said it was in part because many students at the Saudi school didn't have sufficient English language skills to study at the college level, leading many to fail or drop out.
The settlement has to be confirmed by the Saudi authority responsible for the college before Algonquin's responsibilities are over. Algonquin said all employees in Saudi Arabia were offered and accepted settlements.
In 2013, a report to Algonquin's board of directors projected Jazan College would generate $19.9 million over the five-year contract.
Two years later a revised report placed the estimated profit at just $4.4 million.