Global Yellow Pages

Global Yellow Pages: to 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 in cash, and the remaining 20% to 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. The business being acquired comprises all “Gloria Jean’s Coffees” and “It’s A Grind” intellectual property, the global supply chain operations, and the master franchisor business for all Gloria Jean’s Coffees coffee houses world-wide. Mgt 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. The group was loss-making in 1HFY14, and is currently in the midst of a restructuring and strategic business diversification.