(Yicai Global) Aug. 5 -- Laix Inc. has received a privatization offer from its three co-founders as the operator of artificial intelligence-driven English language teacher app Liulishuo’s share price plumbs new depths amid the Chinese government's crackdown on extra-curricular classes.

Yi Wang, who is also chairman and chief executive officer, Hu Zheren, who is also director and chief technology officer and Hui Lin who is also a director and chief scientist, plan to acquire all outstanding company shares at a price of USD1.13 apiece, Laix said yesterday. This would be less than a tenth of the issue price of USD12.50 when the company went public on the New York stock exchange in 2018.

A special committee comprised of only independent and disinterested directors will be formed to appraise the offer, and no decisions have been made yet, the Shanghai-based firm said. No further details were given.

China’s online education sector is under extreme duress as the government has clamped down on their main source of income, extracurricular classes, and cut off many of their funding sources as part of a crackdown to reduce the burden in the country’s school kids and bring the sector, which has exploded since the outbreak of the Covid-19 pandemic last year as many schools turned to home learning, to heel.

Laix surged to profit in the first quarter for the first time since it was founded nine years ago. It logged profit of CNY12.2 million (USD1.9 million), in a huge turnaround from the CNY34.7 million that it lost in the previous quarter and the CNY197 million it hemorrhaged in the same period a year earlier.

Revenue for the three months ended March 31, though, was down 13 percent year on year and 15.7 percent from the fourth quarter last year to CNY198.5 million (USD30.3 million).

The outlook does not look good. Revenue for the second quarter is likely to fall as much as 40.6 percent from a year earlier, the company said in its latest earnings forecast.

Laix’s share price [NYSE:LAIX] closed up 0.98 percent at USD1.03 yesterday.

Editor: Kim Taylor