Kimly shares fall amid probe over Asian Story acquisition

A Kimly coffee shop in Bishan. Kimly has been repaid $12 million out of $16 million in the acquisition of Asian Story Corporation. The balance is to be paid back over three years, said the coffee-shop operator, which runs nearly 70 food outlets and 1
A Kimly coffee shop in Bishan. Kimly has been repaid $12 million out of $16 million in the acquisition of Asian Story Corporation. The balance is to be paid back over three years, said the coffee-shop operator, which runs nearly 70 food outlets and 130 food stalls islandwide.LIANHE ZAOBAO FILE PHOTO

Two execs investigated even as coffee-shop operator backs out of deal to buy drinks firm

Share prices of coffee-shop operator Kimly fell yesterday, following news that its executive chairman and another director were under a probe involving its recent acquisition of drinks manufacturer Asian Story Corporation (ASC).

Its shares resumed trading yesterday after a halt since Tuesday, and closed at around 25 cents - down from 28 cents.

In a late-night announcement on Thursday, Kimly also said it was backing out of its $16 million acquisition of ASC.

Both Kimly and ASC had received letters from the Commercial Affairs Department (CAD) and the Monetary Authority of Singapore dated Nov 22, requesting certain documents and equipment, said Kimly in a filing to the Singapore Exchange.

It added that the requests were made because of a potential offence under the Securities and Futures Act.

The authorities asked Kimly for documents relating to its initial public offering and its acquisition of ASC, as well as its corporate secretarial records from Jan 1, 2016.

They also requested information technology equipment used by Kimly executive chairman Lim Hee Liat, executive director Chia Cher Khiang and former non-executive director Ong Eng Sing.

Mr Ong, also known as Alain, was Pokka International's chief executive officer until recently.

Mr Lim and Mr Chia have since been interviewed by the CAD, and have surrendered their travel documents to the department.

Separately, ASC was asked to produce its corporate secretarial and financial records, as well as documents relating to its July acquisition.

Mr Lim and Mr Chia will continue in their roles at Kimly as no formal charges have been made.

But the company has rolled back its acquisition of ASC, saying that Pokka Corporation (Singapore) signalled its intent last week to terminate a manufacturing agreement with ASC.

Kimly has since been repaid $12 million, with the balance to be paid back over three years, said the operator, which runs nearly 70 food outlets and 130 food stalls islandwide.

Mr Ong, who retired from his directorship at Kimly in January, was suspended as CEO of Pokka International in September following an internal audit.

In late September, Chinese evening daily Lianhe Wanbao reported that Mr Ong was tipped to join Kimly, but Kimly declined to comment.

Meanwhile, Pokka said Mr Ong is "no longer an employee of Pokka International or Pokka Corporation", and that its termination of the manufacturing agreement with ASC was a "commercial decision".

Mr Ong's wife, Mediacorp actress Vivian Lai, had endorsed Pokka for at least a decade before her latest three-year contract ended this year.

Meanwhile, Kimly has said it will engage professionals to assist in a review and enhancement of its internal controls and governance.

Ms Wong Kok Yoong, its chief financial officer, has been appointed finance director.

Given the reversal of the ASC acquisition, Kimly's financial results have not been consolidated into its unaudited financial statements.

It announced a 2.1 per cent growth in net attributable profit to $21.9 million for the financial year ended Sept 30, and its revenue rose 5.3 per cent to $202.2 million.

A version of this article appeared in the print edition of The Straits Times on December 01, 2018, with the headline 'Kimly shares fall amid probe over Asian Story acquisition'. Print Edition | Subscribe