SINGAPORE (Oct 22): Kimly is eyeing the acquisition of a portfolio of coffeeshop leases, coffeeshop units and industrial canteen units for a total consideration of $59 million.
In a bourse filing on Tuesday, the coffeeshop operator says its wholly-owned subsidiary, Jin Wei Food Holdings, has entered into a non-binding term sheet with a group of third party vendors in connection with the proposed acquisition.
Kimly will pay $56.1 million for four long term leasehold coffeeshop units, which are HDB commercial units located within mature HDB estates; and three freehold industrial canteen units, which are located in mature and populated industrial areas in close proximity to residential areas.
Some $46.1 million of this will be satisfied in cash through a combination of internal resources and external funding, while the remaining $10 million will be funded through the issuance of 40 million new shares at 25 cents each.
The issue price represents a premium of 11.36% to the volume weighted average price of 22.45 cents on Oct 21, the last full market day before the signing of the term sheet.
In addition, Kimly will pay some $2.9 million for three short term coffeeshop leases, which are HDB direct leases.
This portion of the total consideration will fully satisfied in cash via internal resources.
Kimly did not disclose the identity of the third party vendors but says they comprise “certain individuals and companies established in Singapore”.
The consideration was arrived at on a willing-buyer, willing-seller basis, taking into consideration the quality of the assets and their utilisation and future potential to the group. Kimly will also be commissioning valuations on the target properties.
The term sheet signed today is non-binding, pending completion of due diligence and valuation of the target properties.
Kimly says the proposed acquisition is in line with its strategy to expand its footprint in Singapore through the acquisition of more food outlets at strategic locations within mature and populated estates with established footfalls.
It adds that it is also part of the group’s ongoing efforts to pursue long term direct ownership of properties where it operates and manages food outlets, so as to enhance shareholder value.
The group also notes that the existing supply of coffeeshop properties owned by private landlords is limited, as a result of HDB’s existing regulations for assignment of leases for coffeeshops and other commercial leases.
“We are currently intensifying our efforts in line with our corporate strategy to secure more long term ownerships of food outlets and food stalls in mature and populated estates with established footfalls, expanding footholds, increasing revenue and profits, and maximizing returns,” Kimly says in a statement.
Shares in Kimly closed flat at 22.5 cents on Tuesday, before the announcement.