Tung Lok and Safra to jointly manage cafe
Janice Lim
A SUBSIDIARY of Tung Lok Restaurants (TLR) has entered into an agreement with Safra to manage a cafe through a joint venture.
The food and beverage group said in a bourse filing on Tuesday (Mar 21) that the joint venture, Camo Cafe & Bar, was incorporated with an initial issued and paid-up capital of S$1,000. All shares will be subscribed for by Tung Lok Millennium (TLM), a wholly-owned subsidiary of TLR.
The share subscription will be funded through the group’s internal resources, it said. TLM and Safra, a recreational club for national servicemen in Singapore, will have equal control of the joint venture (JV).
TLR added that Safra will grant initial loans to the cafe. The JV will repay these loans only when the agreement between TLM and Safra is terminated, or when TLM recovers the capital that has been invested into it.
If the new entity requires loans for working capital, both TLM and Safra will be obligated to grant it unsecured and interest-free loans in equal proportions, said the group. Net profits after taxation from the JV will also be split equally.
The JV’s management committee will comprise three representatives each from TLM and Safra.
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TLR said its board “believes that Safra is a good strategic partner which the group can closely collaborate with”.
Noting that the recreational club has some 430,000 members, TLR said the agreement allows it “to leverage Safra’s network and strong membership base to grow the group’s revenue streams”.
The first outlet to be set up under the JV will be located at Safra’s Choa Chu Kang clubhouse, which is set to open in May.
TLR added that the agreement and JV are “not expected to have any material impact” on the net earnings per share or net tangible assets per share of the group for its financial year ending on Mar 31.
Shares of Tung Lok closed flat at S$0.12 on Tuesday, before the announcement.
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