SINGAPORE - Catalist-listed coffee shop operator Kimly has received an advance repayment of $1.4 million from the vendor in its aborted acquisition of Asian Story Corporation (ASC), which is under probe by the authorities.
The vendor is former Pokka Corp employee Wang Chia Ye, and the first instalment of the repayment was due by Nov 29, 2019. The balance outstanding amount of $2.6 million is repayable in two equal instalments of $1.3 million by Nov 29, 2020, and Nov 29, 2021. Mr Wang has already returned $12 million from the cancelled $16 million sale.
In a regulatory filing on Tuesday (Jan 8), Kimly also said that the security for the outstanding payments had been changed from ASC's shares and book debts to shares of quoted equity securities held by the vendor. Any dividends received from those quoted equity securities will be applied towards repayment of the outstanding amounts from time to time, Kimly added.
In November last year, the company revealed that its executive chairman Lim Hee Liat and executive director Chia Cher Khiang are under investigation by the Monetary Authority of Singapore, and the Commercial Affairs Department for allegedly flouting the Securities and Futures Act. Both were arrested and later released on bail.
Kimly also cancelled its purchase of ASC, which it bought from Mr Wang for $16 million in cash, a deal completed on July 2 last year. The terms of the deal allowed for Mr Wang to have an "earn-out payment", depending on the amount of annual pre-tax profit the company earned. If the pre-tax profit exceeded S$2 million, he would have been entitled to an earn-out payment of S$8 million; if it fell below S$2 million, the earn-out payment would have been pro-rated.
Kimly said it decided to cancel the deal after Pokka Corp gave a six month notice on Nov 22 to terminate its manufacturing agreement with ASC.
Shares in Kimly closed at 24.5 cents apiece on Monday.