Going public isn’t for everyone. And if you’re Just Kitchen Holdings (TSXV: JK), apparently its worthwhile to reverse the decision and go private instead.
JustKitchen has entered an arrangement to go private, with the firm to be acquired by JF Investment Co, a Taiwan-based corporation that is jointly owned by CEO Jason Hsin-How Chen, director Freddie Hsi-Liang Liu, along with Jerry Tai-Han Chiu and Sheng Min Su. The group is said to collectively own 14.4 million shares of the issuer.
The go-private transaction will see JF Investment pay $0.09 per share in the form of cash, which is said to represent a 73.1% premium to the twenty day volume weight average price of the company. Shareholders will have the option to maintain their interest in the company on a private basis, with those shareholders to be issued JK Taiwan shares.
In determining that the decision was the right one for the board, a special committee of board members have suggested the transaction brings “certainty of value and liquidity” for shareholders, while giving investors the option to retain their interest. JustKitchen was reportedly unable to attract strategic investment or a business combination or sale, which gave rise to the current deal structure.
Approval of the transaction is subject to shareholder approval, along with standard regulatory approvals.
The transaction follows the company going public two years ago in April 2021, with the firm just months later raising $17.5 million in a bought deal private placement at a price of $1.35 per share, and a further $4.0 million in a non-brokered portion of the financing.
The company operates “ghost kitchens,” which are effectively delivery-only restaurants. The theory behind the model is that it should lead to higher gross margins due to the lack of brick and mortar expenses of having a dining room, however the most recent quarter saw the company record $4.0 million in sales and operating expenses of $4.2 million, while 2022 saw the firm post $19.0 million in sales and $22.1 million in operating expenses, before general and administrative expenses are factored in.
The company meanwhile as of December 31 had just $608,000 in cash on hand.
Just Kitchen last traded at $0.075 on the TSX Venture.
Information for this briefing was found via Sedar, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
