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honestbee makes management changes, eyes co-working play

honestbee makes management changes, eyes co-working play

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4 -min read
Listen to this article

HONESTBEE has promoted its chief of staff Varian Lim to be its new chief operating officer (COO), the distressed grocery startup announced on Friday. 

Mr Lim has been with the firm since its founding in 2015, in roles such as vice-president of corporate strategy. As COO, he will head honestbee's day-to-day operations, improve the firm's business practices and focus on sustainable growth. 

honestbee, which is in the midst of restructuring over US$209 million of debt, also announced a slew of other appointments to strengthen its management. Lim Yiak Tiam, who was appointed interim chief financial officer in September, is now the startup's vice-president of finance. Trained as an accountant, he previously worked as a finance director at advertising agencies.

honestbee has also appointed an interim general counsel, Sharon Ong, who was previously in-house legal counsel at Pacific Carriers, a unit of the Kuok Group.

The startup's managing director Chua Zhen Rong has been redesignated vice-president of regional growth, while special projects director Anthony Ung will now serve as vice-president of corporate strategy. Kenneth Forbes, general manager of the supermarket habitat, has been promoted to vice-president of habitat. 

In the next month, honestbee will also appoint a new director to its board, chief executive Ong Lay Ann told The Business Times (BT) in a recent interview. Existing board members include Mr Ong and two US-based individuals, Richard Tai and Samuel Asher. 

The appointments come as honestbee works on its scheme of arrangement to restructure over US$209 million worth of debt, primarily in convertible notes, into equity. 

On Oct 1, the startup gained a four-month debt stay from the Singapore High Court. It will need to present details of its scheme by end-January 2020, which its unsecured creditors - numbering about 1,800 - will subsequently vote on.

In the interim, honestbee is eyeing an opportunistic play for some extra cash - to sub-lease about half of its Delta House office space to other startups for co-working. Mr Ong told BT that the co-working space, called b. at Delta, would be able to seat up to 100 tenants. It would comprise hot desks, dedicated desks and a private office. 

The company may be some way off from the plan taking flight, as approval from its landlord is pending. An honestbee spokesman declined to comment on the existing tenure of the lease and whether it allows sub-leasing, citing confidential agreements. 

Mr Ong said that the embattled startup plans to keep its office for the long haul, which is why it is prepared to sub-lease the space for some extra income, where "every dollar earned is a dollar saved". 

BT understands from previous filings that honestbee spends about S$125,000 in rentals monthly for its office space as well as habitat, which is located at Boon Leat Terrace. 

But Mr Ong was quick to add: "We have no plans to be a WeWork... We are not going to lease another 10 properties and go into that business. I'm just trying to utilise existing resources we have and make those resources work a little harder. 

"Our office has been done up quite nicely, a lot of money has been spent on it. It makes more sense to stay than to move out, find something else and have to refit... It also give us flexibility if we might need some of that space back," he said. 

When asked if leasing space out to startups carries a higher risk of default, Mr Ong responded: "The risk is higher but the actual quantum is small, in terms of the exposure. We are paying for the rent (of the whole office) anyway." 

honestbee is currently burning about US$1 million to US$1.5 million monthly, Mr Ong estimates. "We've managed to bring the cost base down, and we're still looking to bring it down further by optimising technology to reduce the burn," he said. 

For now, Mr Ong is keeping busy with ironing out specifics of the scheme, such as the conversion ratio for the debt-to-equity swap. The startup is also still in discussions with the landlord of habitat, LHN, which has opposed honestbee's application for court protection.