YKGI announced that it has terminated a joint venture (JV) agreement with Malaysia-based Oriental Coffee International.
Oriental Coffee operates the Oriental Kopi traditional coffee house outlets across KL, Selangor and Johor areas in Malaysia.
To recap, the duo entered into the JV agreement in Aug 15, 2023. A JV company was set up between the two, with an initial paid-up capital of $10,000 comprising 10,000 ordinary shares. YKGI YK9 held a 70% stake in the JV company, while Oriental Coffee held the remaining 30%.
The JV business was expected to provide additional future revenue streams for the group and would also enable the group to leverage on the business networks and knowhow of Oriental Kopi and to acquire and develop the group's expertise in operating traditional coffee houses in Singapore.
As part of the JV, YKGI provided Oriental Coffee a security deposit of $200,000, of which $50,000 was deposited in cash and the remaining $150,000 deposited by way of a banker’s guarantee.
According to the Jan 26 JV termination announcement, YKGI says that there had been no further developments in the joint venture since Aug 15 and the JV company had not commenced operations. Hence, the JV termination is not expected to have any impact on the company.
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Oriental Coffee shall exit the JV company, after which the vehicle will be a wholly-owned subsidiary of YKGI. YKGI will then use this vehicle for future joint venture projects.
Oriental Coffee will also refund in full to YKGI the security deposit of $50,000. Oriental Coffee will also pay to YKGI about $22,000 for all legal, accounting, corporate secretarial and other professional fees and disbursements incurred by YKGI in connection with the joint venture agreement and termination.
Shares in YKGI closed at 10 cents on Jan 26, 40.5% or 7 cents lower than its IPO price of 17 cents.
