Honestbee has received financial support from key investor Brian Koo and his associated funds to clean up its debt load and start afresh.
According to a Business Times report, the Singapore-based delivery startup has signed an agreement with FLK Holdings, a US incorporated company backed by Brian Koo, Honestbee’s former chairman and interim chief executive, Formation Group Fund I, and Formation Group (Cayman) Fund I. Both Formation Group funds are also associated with Koo.
The agreement will involve a capital injection of $7 million into Honestbee, which is proposing a scheme that would see its creditors paid in a mix of cash and equity.
Honestbee’s CEO Ong Lay Ann verified the development, sharing that the investment is to provide working capital and payment to its creditors. He added that the company will need to raise more capital post-scheme to relaunch various parts of the business.
Ong shared that while Honestbee has received good investor interest, several are only willing to look at it once the restructuring process is complete. He said the aim is to achieve a debt-free status for Honestbee once the scheme is fully executed. He did not provide a deadline on when this might be.
According to the Straits Times report, FLK Holdings will set up a private entity in Singapore to which Honestbee’s business, assets and liabilities will be transferred into. This Singapore-registered entity will then issue shares to Honestbee’s creditors. Honestbee’s total debt to its creditors is about $230 million (S$313 million).
This agreement, however, is understood to be subject to the fulfillment of several conditions, including the extension of Honestbee’s debt moratorium by at least six months from Friday, scheme approval by the court and creditors, and Honestbee’s continued lease at its Habitat outlet in Boon Leat Terrace, Pasir Panjang.
Brian Koo, whose family controls South Korea tech giant LG, is Honestbee’s only secured creditor.
Koo, Formation Group and A Honestbee, a Singapore-registered special purpose vehicle linked to the Koo family, have poured over $8.3 million into the company since July 2019 for operating expenses.