Diners at Jones The Grocer at Dempsey Road. Beleaguered Australian gourmet chain Jones the Grocer has been sold to Fresh Bay Investments for S$2.75 million, said parties involved in the sale, revealing the transaction amount for the first time on Sunday.

Singapore

BELEAGUERED Australian gourmet chain Jones the Grocer has been sold to Fresh Bay Investments for S$2.75 million, said parties involved in the sale, revealing the transaction amount for the first time on Sunday.

Fresh Bay Investments is an investment vehicle of L Capital Asia, LVMH Moet Hennessy Louis Vuitton's private equity arm. The latter has pumped close to S$17 million into the chain's Singapore business, Jones the Grocer International (JTGI), ever since it took a majority stake in the global chain three years ago.

JTGI was placed under judicial management last December and its assets were put up for public sale in March as it had only S$61,000 cash and bank balances in hand and was unable to repay its recorded liabilities of S$15 million.

After a period of competitive bidding, Fresh Bay emerged the highest bidder, and the sale-and-purchase agreement was signed on May 29.

Stay updated with

BT newsletters Sign up By signing up, you agree to our Privacy Policy and Terms and Conditions. Your feedback is important to us Tell us what you think. Email us at btuserfeedback@sph.com.sg

While Fresh Bay is still in the process of taking over operations of the Jones the Grocer outlets at Dempsey Hill and Mandarin Gallery from JTGI - including signing employment contracts with the existing employees, negotiating lease agreements and applying for requisite licences - Fresh Bay fully paid up the purchase price of S$2.75 million last Friday. Fresh Bay has also purchased the Singapore franchise rights to the Jones the Grocer brand from its parent company in Australia, which is also owned by L Capital.

"The purchase price reflects the confidence that Fresh Bay has in the business," said Goh Thien Phong, business recovery services leader at PwC Singapore, who acted as the firm's judicial manager. He added that he was "pleased with the outcome as this is far superior than a winding-up scenario when the unsecured third-party creditors will not be paid anything at all".

"This would not have been achieved without the strong support of the unsecured third-party creditors in continuing business with the company and approving the proposal" and L Capital's agreement to share a portion of the sale proceeds with the unsecured third-party creditors, Mr Goh further stated. At a creditors' meeting held on April 17, more than 80 per cent of attendees voted in favour of selling JTGI rather than winding it up.

It was also agreed that 15 per cent of the sale proceeds - S$412,500 - will be set aside to be shared by the unsecured third-party creditors; and that any surplus sale proceeds and remaining cash from operations after full payment to preferential creditors will be further shared by unsecured third-party creditors.

Mr Goh handed over the running of operations of the two Singapore outlets to Fresh Bay on June 27, but will continue to facilitate the transfer of employees and the applications for the requisite licences, which is expected to take another 1-2 months. Once completed, he will place JTGI under liquidation.

All employee costs and purchases made in the judicial management period will be fully paid off; as well as debts to preferential creditors, including a S$1 million loan to JTGI from L Capital to fund the company through its judicial management period; monies due to the Inland Revenue Authority of Singapore; and administration costs of the judicial management and interim judicial management.

The adjudication of the proof of debts filed by the unsecured third-party creditors, which stand at approximately S$5 million, and the repayment of debts will be overseen by Mr Goh, in a process that is expected to take up to the end of the year.

Creditors reacted to the announcement of the sale with mixed feelings. While most were sceptical about recovering a significant portion of their original debts after the proceeds are divided among numerous creditors, a few said they were relieved that the brand will continue to operate.

One wine distributor, who continued to supply JTGI through its judicial management period despite being owed a five-figure sum, said he did so as he believed that the Jones brand is a strong household name that would not be left to fail.

"While we probably can't get back what we are owed, we hope that through a good ongoing relationship with L Capital - which owns many other food-and-beverage businesses - we can continue to expand our business and eventually make more than we have lost, in the long term," said the distributor.

L Capital managing partner Ravi Thakran said earlier this month that more outlets in iconic locations in Singapore were on the blueprint.