Kuching, 23 Nov 2020,
Borneo Oil Berhad plans to invest RM20mil to expand its food and franchise operations (FFO), particularly the home-grown SugarBun fast food restaurant chain business in Malaysia.
The group intends to invest RM10mil to expand the food products within the FFO business segment by exploring and identifying any new business opportunities to widen the product offerings.
Currently, in-house food and beverage (F&B) brands held under SugarBun are “Broasted Chicken”, “Borneo Eco Fish” and “Hot Saucy Kano”, while under the group’s pizza chain Pezzo are the “Sarawak Laksa”, “Fisherman’s Favourite” and “Chicken Rendang” pizza. There are some 125 SugarBun and Pezzo outlets currently in operations, most of them in Sarawak and Sabah.
Borneo Oil said in a filing with Bursa Malaysia that RM2.5mil will be allocated to part-finance the construction of a new chilli plant in Tawau, Sabah to produce a new in-house sauce under the “Sabasco Premium Sabah Borneo” brand.
Other planned projects are a SugarBun stand-alone outlet in Kota Kinabalu which is estimated to cost RM4.55mil, a new central kitchen and warehouse based in Kuala Lumpur, upgrading the existing Kuching central kitchen and the setting up of five new shared kitchen centres in Malaysia
The money for the expansion projects will come from the proceeds of share subscriptions in Borneo Oil by Australia-listed Macquarie Bank Ltd.
On Nov 17, Borneo Oil entered into a conditional share subscription agreement with Macquarie Bank for the subscription of up to nearly 1.21 billion new Borneo Oil shares, representing about 20% of the company’s current number of issued shares of about 6.03 billion units.
The two parties have agreed to fix a floor price of 2.5 sen per placement share, which is a discount of 44.44% to the closing price of Borneo Oil shares at 4.5 sen on the day before they inked the agreement.
Borneo Oil said based on an illustrative issue price of 3.6 sen per placement share, the company will raise RM43.41mil from the full share subscription by Macquarie Bank.
In the past three months, Borneo Oil has raised a total of RM23.72mil from the placement of some 626.3 million new ordinary shares.
Besides the RM20mil earmarked for business expansion and/or investment for the FFO business segment, RM10mil will be utilised for the group’s gold exploration works in Hutan Simpan Bukit Ibam in Keratong, Pahang and RM12.41mil for the group’s working capital requirements.
Since the conclusion of the first preliminary exploration works in Bukit Ibam in March 2019, Borneo Oil said an assessment of potential gold resources was conducted, the result of which showed potential gold resources of 60,032 ounces. Presently, the group is in the midst of its exploration works in other zones within Bukit Ibam.
On the SugarBun stand-alone outlet project, Borneo Oil said it would house all the group’s food brands, including SugarBun, Borneo Asian Food and Pezzo.
“Apart from the group’s brand being the anchor tenant of the retail/commercial development area, the management intends to rent out the remaining outlets to other food retailers such as, among others, premium frozen seafood product retailers, fresh local produce and bakeries with coffee bars, ” it said.
Borneo Oil said it had identified Kuala Lumpur and Kota Kinabalu to set up five shared kitchen centres, which is a new concept whereby the group will provide kitchen space that is fully equipped with kitchen and cooking facilities readily rented by small and medium F&B business owners/chefs.
It said these shared kitchen space (about 200 sq ft each) is expected to relieve the burden of small and medium business owners/chefs from incurring investment costs associated with operating dine-in restaurants such as renting a new shoplot or outlet to sell their F&B.
Borneo Oil said it was now in the midst of negotiating with Foodpanda, an online food ordering service provider, whereby its current merchants (F&B outlets and/or food providers) may rent the shared kitchen space to prepare the food for delivery orders made online with Foodpanda.
“The Foodpanda riders will collect the delivery orders made from the food merchants gathered in the shared kitchen space and deliver to end-customers. This will lessen the trips of these riders and increase the productivity of the logistics process for any food orders.”
Borneo Oil said it intends to collaborate with MobilityOne, an e-wallet service provider, to launch an e-wallet (cashless payment) at the group’s SugarBun outlets. It said the collaboration will enable the group to leverage on MobilityOne’s e-commerce merchant network.
Source: The Star
Full Article: https://www.thestar.com.my/business/business-news/2020/11/23/borneo-oil-to-grow-food-and-franchise-operations