SET-listed Pace Development Corporation Plc has entered into an agreement to grant the Dean & DeLuca franchise in China to Kinghill Overseas Holding Ltd, a subsidiary of Charoen Pokphand Group.
Dean & DeLuca China HK, which is Pace's wholly owned subsidiary, negotiated the deal with Kinghill Holding.
"Under the agreement's framework, the parties agree to negotiate with the aim of entering into a master franchise agreement granting Kinghill and/or its affiliates the exclusive right to act as the master franchiser of Dean & DeLuca cafes and Dean & DeLuca markets in China, for the expansion of 500 stores over five years," Pace said in a release. "The master franchise agreement shall be completed within 60 days from the date of the framework agreement, or later if the parties decide to extend."
The deal is also subject to regulatory approval, as well as consent from Siam Commercial Bank, Pace's main creditor.
Kinghill has expressed interest in investing in Dean & DeLuca China and has entered into an agreement with Dean & DeLuca Asia Thailand, which directly holds a 100% stake in Dean & DeLuca China.
The framework has the option of granting Kinghill Overseas and its affiliates the purchase of up to 49% of Dean & DeLuca China, with two tranches of options divided into 30% and 19% of shares.
The prices for both tranches are subject to further negotiations between the involved parties, Pace said.
Despite successfully selling some assets at the MahaNakhon development to King Power MahaNakhon, owned by King Power International Group, Pace still faces financial strains.
The company reported a 94% profit plunge in the second quarter, leading to a net loss of 3.87 billion baht for the first half of 2018.
PACE shares closed on Wednesday at 0.72 baht, up five satang, in trade worth 252 million baht.