Ellipsiz restructures vending business with JV exit, fresh investment

MAINBOARD-LISTED Ellipsiz has exited its loss-making joint venture Kalms Investment Pte Ltd (KIPL), and instead invested S$500,000 in Indovend, a newly-incorporated company involved in the trade of vending machines. Both actions are part of a restructuring Ellipsiz's vending-solutions segment, the company said in a bourse filing on Thursday. 

As part of the divestment from KIPL, EIR Investments (EIR), a wholly-owned unit of Ellipsiz, transferred its 50 per cent stake in KIPL to another entity, Kalms International, for S$1. EIR also assigned all of its rights under S$5.3 million in loans it extended to KSPL, a unit of KIPL, over to Kalms. 

In return, KIPL, Kalms and an individual Eddie Lim have waived the non-compete clause of their agreement with Ellipsiz, paving the way for EIR to engage in the same vending-solutions business that KIPL conducts in nine South-east Asian countries. But EIR may not conduct the business in other countries. 

Separately, EIR has invested S$500,000 in cash for a 60 per cent stake in Indovend, a company incorporated in Singapore in November 2019. Tengku Azan Shah bin Tengku Sri Indra, the former chief executive of KSPL, will be appointed the new chief executive of Indovend. EIR will also nominate two directors to Indovend's board. 

EIR decided to exit KIPL as "substantial funding is required... for its operations to cover capital expenditures", research and development, overheads and other ongoing operational-related costs to launch new concepts", Ellipsiz said in the filing.

EIR does not expect KSPL to repay the S$5.3 million in loans, due to its near-to-mid-term unprofitability. 

"The restructuring not only allows the Group to exit a loss-making venture but also enables the group to immediately pursue the business independently of its joint-venture partner. Through its majority stake in Indovend, the Group will have control over the management and operations," Ellipsiz said in the filing. 

Indovend plans to penetrate Indonesia's vending market through distribution of intelligent vending machines to businesses in food and beverage, leisure and hospitality. 

Ellipsiz shares closed at S$0.40 on Thursday, down 5.88 per cent.