Honestbee’s existing investors keen to invest up to $30m amidst restructuring: Report

Singapore-based grocery and food delivery startup Honestbee said it has received support from existing investors who expressed interest to invest up to $30 million in the company, according to a report by The Business Times.

Citing letters attached to a court affidavit, the report said Honestbee has received support from three existing investors which include current chairman Brian Koo, A Honestbee Pte Ltd (controlled by Koo) and Silicon Valley-based venture capital firm Formation Group for its proposal to exchange its unsecured debt into equity at an undetermined rate.

These three parties, who represent about 77.2 per cent of Honestbee’s debt, also expressed interest in investing up to a further $10 million each in the startup. Formation Group added it is prepared to commit $25 million to Honestbee after restructuring.

In the affidavit, Honestbee newly-appointed CEO Ong Lay Ann said potential investors have been “deterred from stepping in due to fears” that their funding will be used to pay off current creditors, instead of being used for working capital.

The startup intends to focus its business on selective markets – Singapore, Malaysia, the Philippines, Taiwan, Japan and Thailand. Currently, operations in all these markets, with the exception of its physical grocery store in Singapore, Habitat – are suspended.

“Our intention is to continue to work on a marketplace partnership model where we will provide the technology required to bring an offline store online and increase the catchment area of the store,” said Ong, adding that Honestbee plans to move towards an asset-light and tech-heavy model.

The court documents also revealed that the startup had a unit in India but is exiting the market. Businesses in Vietnam, Hong Kong and Indonesia have been shut down.

The struggling startup is said to have accumulated about $209 million of debt from its lenders and trade creditors. Last week, it asked the Singapore High Court for a six-month moratorium to restructure its debt, after having laid off 38 employees in Singapore.

Formation Group is the startup’s only secured creditor. The debt, for an undisclosed amount, is secured by an all-monies charge. The largest of those unsecured financial creditors is A Honestbee Pte Ltd, which is owed $137.3 million while Koo – Honestbee’s third-largest unsecured financial creditor – is owed $16.2 million.

Honestbee also owes its unsecured trade creditors some $5.7 million, including Shopfit (S) Pte Ltd ($2.4 million) and Amazon Web Services ($356,000).

In the affidavit sighted by The Business Times, Honestbee has received 34 letters of demand for about S$5.1 million ($3.7 million), besides being saddle with numerous outstanding property and van leases.

The largest claimant is Benjamin Lim, who is seeking $3.8 million and suing the startup’s former CEO Joel Sng. Besides Lim, Honestbee is also facing 11 more legal proceedings that have been filed by various parties who are most likely merchants that it has previously worked with.