Global Yellow Pages

Global Yellow Pages: Group will acquire 100% of Gloria Jean’s Coffees business in a deal worth A$35.6m ($40.7m), subject to certain profit conditions. 80% of the consideration will be paid for in cash, and the remaining 20% will be paid by way of 116.4m new GYP shares issued at $0.07 each. Gloria Jean’s Coffees is a leading global specialty coffee and coffee house chain with over 800 coffee houses across 39 countries worldwide, under the “Gloria Jean’s Coffees” and “It’s A Grind” brands. Management believes there is significant potential for further expansion of the brand in Asia, especially China. To fund the acquisition and strengthen GYP’s financial capacity, the group is proposing to raise up to $149.1m in net proceeds via a renounceable rights-cum-warrants issue (assuming full subscription). The proposed entitlement will be 3 rights shares for every 2 existing GYP shares, to be issued at $0.05 each. Each right share will come attached with one free detachable warrant to subscribe for one new GYP share at an exercise price of $0.07. The rights issue will be partially underwritten by UOB Kay Hian and supported by undertakings from CEO Stanley Tan and substantial shareholder Sam Goi. Based on FYMar13 numbers, GYP’s NAV per share will fall from 12.28¢ to 7.21¢, and core EPS will improve from 0.71¢ to 0.85¢, post the proposed acquisition and rights issue. GYP was loss-making in 1HFY14. But investors remain hopeful that the group, now backed by food tycoon Sam Goi, and Chairman Mah Bow Tan, may emerge stronger once the on-going restructuring and strategic business diversification is completed.