Kimly's unit enters joint venture to run coffeeshops in Bukit Batok and Aljunied

CATALIST-listed coffeeshop consolidator Kimly announced on Wednesday that its wholly-owned subsidiary, Kimly Makan Place has entered two joint-venture agreements for around S$2.5 million to operate and manage coffeeshops in Aljunied and Bukit Batok.

Two private companies, Joo Seng Holdings and Hong Kah Holdings, have each entered into a joint venture with Kimly Makan Place to manage the coffeeshops at Block 1 Upper Aljunied Lane and Block 376 Bukit Batok Street 31 respectively.

The total fees to be paid by Kimly Makan Place is made up of S$294,000 for a 49 per cent stake in each JV company and a S$2.2 million lease assignment fee, which was arrived at on a willing buyer-willing seller basis, taking into consideration various factors such as the market rent for comparable leases based on location, size and current rent paid.

The lease assignment fee has been wholly satisfied in cash through the utilisation of the internal resources of the group, said Kimly in a regulatory update on Wednesday.

The joint ventures are in line with the group's strategy to expand its network of food outlets in Singapore and establish new outlets and stalls when strategic locations become available, said Kimly.

"The group will able to diversify and expand its revenue stream through additional and recurrent rental streams, which mitigates the uncertainties in the private-leasing category," it said.

Some 147,000 ordinary shares will be allocated to Kimly Makan Place and 152,900 ordinary shares each to Hong Kah and Joo Seng, at a consideration of S$147,000 and S$152,900 respectively.

Upon completion of the subscription and allotment, Kimly Makan Place will hold 49 per cent of shares in the respective JV companies; Hong Kah and Joo Seng will each hold the remaining 51 per cent.

The board of directors of each of the JV companies will comprise two directors, with one director each being nominated by Kimly Makan Place and the JV partners. Meanwhile, the chairman of the board of the directors shall be solely appointed by Kimly Makan Place.

Kimly Makan Place will also be entering a third and final JV agreement with S. Tong Hong coffeeshop at Block 429A Choa Chu Kang Avenue 4 at a later date. upon obtaining permission from HDB. This agreement has been delayed by Covid-19.

Shares of Kimly last traded on Tuesday at 24.5 Singapore cents.