Funding

Honestbee To Get US$7M Lifeline - Proposes Repayment To Creditors With 3% Cash, 97% Shares

In the last six months, homegrown startup honestbee has witnessed a couple of significant changes.

Its chairman Brian Koo has resigned, it unveiled a renewed focus on its grocery business in Singapore, it shared plans to revamp the ‘habitat’ supermarket and app, and it also announced some new leadership appointments.

It’s pretty clear to see that honestbee is trying its best to turn the firm around with a new management and business direction.

brian koo honestbee
Brian Koo, honestbee’s former chairman / Image Credit: honestbee

Yesterday (30 Jan), it was reported that Brian Koo has invested more money in the struggling firm.

Beyond being an ex-chairman, Koo is also a key investor of honestbee. He is listed as a shareholder for both of honestbee’s ventures registered in Singapore, and his Formation 8 VC firm has provided significant funding for the startup since the early days.

A previous report revealed that Koo and associates are owed around S$258 million, which is almost 90 per cent of the company’s debt.

Two days before his resignation on 10 September 2019, Koo invested a further US$650,000 (S$895,000) in the firm.

Most of this capital, along with another US$2 million investment by Koo and Formation Group, has been used for day-to-day business operations, reported The Business Times.

Honestbee Still Owes Creditors S$313M

According to The Straits Times, honestbee has signed an investment agreement earlier this month with US-based FLK Holdings, where Koo is a shareholder.

It is reported that FLK Holdings is investing about US$7 million in honestbee.

This will go towards working capital, full payment to creditors owed $500 or less, debt repayment to scheme creditors, and professional fees and expenses.

FLK Holdings is reportedly the only company that is keen on investing in honestbee, and is currently working on a scheme of arrangement to creditors.

FLK Holdings will incorporate a private entity in Singapore to which honestbee’s business, assets and liabilities will be transferred. Koo and his venture capital firm Formation Group will also be major shareholders in the new company.

This Singapore-registered entity will then issue shares to Honestbee’s creditors, excluding those who are owed S$500 or less.

About 800 creditors will be offered three cents on the dollar in cash, and the remaining 97 per cent in company shares of the new entity.

If the scheme goes through, creditors will own between 70 and 75 per cent of the new Singapore-registered firm.

The agreement between Honestbee and FLK Holdings is subject to several conditions being fulfilled or waived by mutual consent.

These include the extension of Honestbee’s debt moratorium by at least six months from Friday, approval of the scheme by the court and creditors, and the firm’s continued lease at its Habitat premises.

Honestbee Seeks Debt Reprieve Of 9 Months

Honestbee currently owes creditors a total of around US$230 million (S$313 million).

honestbee singapore office
Honestbee team in Singapore / Image Credit: honestbee

According to an honestbee spokesperson, debts owed to ex-employees “have been paid to date.” They will be receiving the final instalment today (Jan 31).

The January tranche due to ex-staff is reportedly close to S$230,000, including Central Provident Fund payments.

Honestbee was granted a four-month extension to its moratorium in September, which ends today (Jan 31).

It is seeking a further debt reprieve of nine months and will be in court today seeking a short moratorium for the period until its next scheduled hearing on Feb 27.

 

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