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Ediya Coffee suffers setback in public offering.

Ediya Coffee has decided to tentatively postpone its KOSPI listing, the nation's No. 3 coffee shop chain in terms of sales said Thursday.

The decision is likely to hinder the construction of its roasting factory, which was scheduled for completion in 2020.

Last year, the coffee shop franchise announced it would launch the initial public offering (IPO) to secure finance for the factory, after buying 12,983 square meters of land for 6.4 billion won ($5.8 million) in Pyeongtaek, Gyeonggi Province, and hiring Mirae Asset Daewoo as lead manager.

Back then, Ediya said the factory would produce the company's instant coffee mix and would allow the company to roast coffee beans.

The factory was reportedly planned to be equipped with facilities for quicker delivery to franchisees.

However, Ediya said it is concerned about the plan's possible fallout on its franchisees, given the company will have to take the shareholders' value into account after the initial public offering (IPO).

"Ediya decided to tentatively delay the IPO, so as to build a tighter relationship with its 2,000 franchisees," said a spokesman from Togo Communication, a PR agency for Ediya. "Amid the fierce competition in the franchise industry, Ediya headquarters regarded the IPO as an inappropriate decision."

Industry officials alleged the company has practically given up on its listing on the main bourse.

Ediya denied the claim, saying the company will reconsider the plan from a long-term perspective.

"With regard to statistics, the outlook has been bright for Ediya's KOSPI listing, which has never been done among the nation's coffee shop franchisers," the spokesman said.

Ediya posted 184.1 billion won ($172 million) in sales and 20.2 billion won in operating profit last year, up 19.9 percent and 27.8 percent from a year earlier, respectively.

Against this backdrop, Ediya Chairman Moon Chang-ki reportedly vowed to focus more on the franchiser's resumption of its sales in the Chinese market.

The company entered into the world's most populous country in 2005, but left in 2008.

It has been usual for the nation's franchisers to drop their IPO plans.

Caffe Bene and Genesis BBQ tried to launch IPOs, but withdrew their plans due to the declining profitability.

All eyes are therefore on Kyochon F and B, which has also announced its IPO plans.

The operator of the nation's leading fried chicken franchise Kyochon Chicken is considering listing the company within two years at the earliest and three years at the latest.

Theborn Korea, a domestic food and beverage company owned by chef Baek Jong-won, is also preparing for an IPO, after hiring NH Investment and Securities as lead manager. The company operates 21 restaurant brands.

Citing the franchise industry's sensitivity to fickle trends, some critics cast a negative outlook on their plans.

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Publication:The Korea Times News (Seoul, Korea)
Date:Apr 12, 2018
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