SET-listed NPPG Thailand Plc has entered into a master franchise agreement with Dean & DeLuca Asia Thailand for exclusive and sub-franchisable rights to open and operate Dean & DeLuca cafes for five years.
"The master franchise agreement shall come into effect [when] the master franchiser obtains consent from Siam Commercial Bank (SCB) in accordance with the terms and conditions specified therein, which is expected to be completed by August," NPPG said in a release.
Renewal rights are stipulated at five years under the agreement.
The company will use funds from the capital increase via rights offerings, which the board of directors approved in a business expansion budget on Feb 6, 2017, NPPG said, adding that the funding source would not have an impact on corporate financial liquidity.
"The board of directors expects that entering into the master franchise agreement will benefit the company and its stakeholders [because it] will help enhance the company's food business [growth]," NPPG said.
There are 12 Dean & DeLuca branches in Thailand, and the company plans to open an additional 100 branches over the next five years.
Some 30% of these branches will be under the company's own investment and the remaining 70% will operate via sub-franchising. Each Dean & DeLuca branch requires an investment sum of 5-8 million baht.
Dean & DeLuca expects 2022 revenue of about 1.5 billion baht.
NPPG makes and distributes flexible plastic packaging for various types of consumer products. The company also runs food and advertising businesses through wholly owned subsidiary NPP Food Incorporation, which operates A&W Restaurants and Miyabi Grill.
Dean & DeLuca Asia Thailand is a subsidiary of high-end property developer Pace Development Plc in which Pace has a 100% indirect stake.
Pace has serviced some debts owed to SCB after a partial sale of assets in the country's highest building, MahaNakhon, to duty-free retailer King Power International Group for 14 billion baht.
In related news, NPPG formed a joint venture with Charoen Pokphand Group in China to branch out its food business in the country for long-term sustainable growth.
The move is a part of the company's strategy to become a leading regional food and drink player over the next five years via strategic partnerships, mergers and acquisitions, and the franchise system.
NPPG executive chairman Suppachak Trairatanobhas said the company is in the process of setting up a joint venture in Hong Kong called Kinghill Food to operate food business in China.
The new joint venture will have registered capital of 5-10 million baht. Shanghai Kinghill under CP Group will hold a 51% stake, with the remaining shares belonging to NPPG.
NPPG yesterday signed a memorandum of understanding with Laem Charoen Group, a seafood restaurant operator, on running the Laem Charoen seafood business in China through a joint venture to be set up in Hong Kong.