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EXCLUSIVE: Is There Still Hope For Honestbee? CEO Ong Lay Ann Shares Plans To Save The Firm

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Honestbee at the moment owes about US$230 million (S$319 million) however it has since been beneath court docket safety from collectors.

In a court docket listening to held yesterday (March 26), honestbee was searching for to cross a scheme of association that may restructure that debt, particularly since it could potentially lose the support of its white night Brian Koo.

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Koo’s enterprise capital agency Formation Group and its US-incorporated car FLK Holdings was presupposed to finance the startup’s restructuring, however they’re reconsidering it attributable to “the worsening Covid-19 pandemic the world over and the ensuing uncertainties.”

Honestbee sought a two-week adjournment “to make clear the place” of FLK and Formation and to doubtlessly search new traders for the corporate, however this was dismissed by the High Court.

Which means that its string of over 1,000 collectors can now apply to wind up the corporate.

As well as, honestbee’s landlord LHN Area Sources can now reclaim the primary stage of 34 Boon Leat Terrace, which homes its habitat grocery store.

Is there then nonetheless any gentle on the finish of the tunnel for honestbee?

Why Did Ong Lay Ann Select To Be The CEO Of A Sinking Ship?

In a gathering with Vulcan Submit on Tuesday (March 24), honestbee CEO Ong Lay Ann shared why he even joined the corporate within the first place, even when it was already displaying indicators of cracks then.

When he assumed the role of a CEO in July last year, Ong was absolutely conscious that he has to do extra than simply “steer the corporate by way of this tough time.”

As a “chief restructuring officer”, his job is to additionally flip the corporate round.

“It’s a tough job,” he admits.

Most of his mates thought he was “loopy” to tackle the function, however he merely sees it as one other enterprise problem.

I’ve carried out a lot of these turnarounds and restructuring earlier than. I’ve received a observe document of doing this. In Australia, I circled an organization fairly quick. I really employed again the administration that used to run it and (collectively), we constructed it from nothing … (until) it’s listed on the Australian Inventory Trade.

At this time, I’m nonetheless the chairman and bigger shareholder there. Alongside the way in which, we’ve acquired a number of extra companies and in the present day, it’s worthwhile.

– Ong Lay Ann, honestbee CEO

He provides that honestbee is certainly a “problem” and a “mess” now, however he believes that there’s nonetheless numerous untapped potential so the will to salvage the corporate continues to be alive.

Apart from being a homegrown model, honestbee is definitely fulfilling a necessity and its tech does work, he careworn.

“There have been items of it that make sense. It’s going to be an enormous job to show (honestbee) round and it’s even tougher now with Covid-19 and all these items added to it, however have I given up hope? No.”

Ong might have very simply declared that the corporate has gone bust and never repay the collectors a single cent. By proposing a scheme of association, honestbee is displaying that it’s attempting to repay a few of their debt — both by money or fairness.

Whereas collectors may not be getting again all the cash owed to them, they may a minimum of be receiving some cash in addition to shares in honestbee.

For this reason it’s crucial for him to show the corporate round, however it’s clear that he can’t do it with out Koo’s assist.

Based on Ong, honestbee is counting on FLK Holdings — a SPV owned by Koo and Formation — to fund its operations.

They had been those that labored with me to mainly flip the enterprise round and funded (it). That’s the way in which to show it round, and that’s why they’re making the provide.

At this second, that’s the provide that I’ve on the desk. I’ve not obtained a greater provide or competing provides from anybody else so that is seemingly the one likelihood that each one the collectors have which is why it’s crucial that we keep (ties) and keep engaged with FLK, Formation and Brian Koo, as a result of they’d be the lifeline for the corporate.

– Ong Lay Ann, honestbee CEO

What’s Subsequent For honestbee?

As somebody who’s tasked at restructuring the corporate, what’s Ong’s present and future plans for honestbee?

Based mostly on media experiences, honestbee is shifting its focus to a quick-service restaurant (QSR). Significantly, it’s planning to open a pizza joint alongside Higher East Coast Highway.

You would possibly ask why a pizza joint? (It was merely) as a result of we had a spare pizza oven — it wasn’t, , a superb thought or something.

It was a pizza oven that honestbee had purchased and absolutely paid for, that’s been sitting in a warehouse earlier than I joined. We’re simply utilizing the prevailing property and we wished to arrange one thing that we predict has potential.

– Ong Lay Ann, honestbee CEO

The pizza joint can be working out of a shophouse that’s owned by Ong himself.

He defined that nobody desires to hire to honestbee — “that’s the fact.” Furthermore, since honestbee is already financially distressed, it can’t afford to place up a rental assure or a pay as you go rental for 12 months.

Past Singapore, Ong revealed that honestbee has plans to restart its on-line grocery supply enterprise in Malaysia, Thailand and the Philippines.

When requested why they’re eyeing these three markets particularly, Ong mentioned that they’ve “sturdy assist from varied companions within the markets.”

In actual fact, in every of those markets, they’ve varied massive grocery store teams which can be ready to companion them.

Ong additionally mirrored on what went flawed in Singapore that prompted its on-line grocery supply enterprise to fail.

Honestbee (on the core) is a tech firm, in order that tech wants to take a seat on high of a grocery store infrastructure with a purpose to present and facilitate that supply. We solely do the supply portion.

The place honestbee went flawed in Singapore was we misplaced the community — which was NTUC — after which we tried to do it ourselves. When you will have one single retailer, it’s by no means going to be a profitable mannequin since you’ll be competing with NTUC, Chilly Storage, Sheng Siong (and the likes).

– Ong Lay Ann, honestbee CEO

He additionally reasoned that honestbee was beforehand too bold because it ran seven completely different companies in eight international locations. “That’s a recipe for catastrophe,” he famous.

Looking back, honestbee ought to first set up themselves in anybody vertical earlier than increasing to all verticals in all markets.

For this reason Ong has picked three key markets which he thinks has one of the best likelihood of restart; and is specializing in only one vertical which they’ve the core benefit on, which is groceries.

How Will They Transfer Ahead With No Funding?

Separate to the potential funding from Koo, honestbee was additionally anticipating a cash injection of around $50 million from a “retail conglomerate”, though that deal has stalled attributable to Covid-19 and restructuring issues.

“This was a take care of one of many different markets that we had been trying to set up in. Korea is just not a market that we’ve launched in so we even have zero prospects (there), which is why it’s not in our relaunch plan,” mentioned Ong.

“But when that partnership or three way partnership with the grocery store group does occur, then we might launch in Korea as effectively.”

Vietnam too, could possibly be one other potential market, mentioned Ong, including that honestbee is open to launch in markets the place there are people who find themselves prepared to companion them.

The truth is that, with no funding, honestbee can’t transfer ahead with its grand plans to restructure the enterprise and begin afresh with new ventures.

Coupled with no court docket safety, honestbee can be sued left and proper with collectors demanding reimbursement, bleeding the startup dry. Evidently, it’s already within the purple proper now, so it’s secure to say that its hopes for revival may be very slim.

Featured Picture Credit score: DealStreetAsia / Advertising Interactive

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