The coffee chain Tim Hortons China (hereinafter referred to as tims China), which is impacting the listing in the United States, has made key progress.
Today, TIMS China announced additional financing commitments totalling US $194.5 million (about RMB 1229 million), lowered the admission valuation to US $1.4 billion (about RMB 8.845 billion), and extended the termination date of the merger agreement with blank check company (SPAC) silver credit acquisition Corp to June 30, 2022.
Since the merger with spac is an indispensable prerequisite for tims China’s listing, it also means that the company’s IPO process may be postponed again. According to the original plan, the merger transaction should have been completed in the fourth quarter of last year, and then postponed to the first quarter of this year.
“Following our recent opening of our 410th store, these agreements mark another important milestone for tims China.” Peter Yu, chairman of the board of directors of tims China, pointed out in a briefing that the new financing commitment will provide sufficient funds for the company’s business planning in the next five years.
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Xiaoshidai noted that in the above notification, the new financing commitment obtained by tims China consists of two parts.
On the one hand, the company said that it had received a commitment from institutional investors to invest US $94.5 million in pipe (Note: tims China is listed in the “spac + pipe” portfolio mode), which will be completed together with the business merger.
According to the above release, this round of pipe investors include Descartes capital group affiliates, restaurant Brands International (hereinafter referred to as RBI) and silver crest management LLC. In addition, some of the pipes are supplemented by the equity support agreement of Shaolin capital management, LLC.
On the other hand, TIMS China said it had signed a US $100 million letter of intent for committed share facility with a global financial services company.
The circular said that the financing will be bound by the common stock purchase agreement. Under the agreement, TIMS China can, at its discretion, sell up to $100 million worth of common shares to the financial services company within 36 months. However, TIMS China did not disclose the specific name of the company.
“Thanks to the additional investment of existing shareholders, especially our partners in RBI. We are also honored to work with Shaolin capital and other global investors to continue to build tims into a first-class coffee and baking shop in China.” Youpeter said in the briefing that the above round of pipe investment, committed share financing and convertible financing are expected to be completed in December, providing sufficient funds for tims China’s five-year business plan.
According to the information, the so-called five-year business plan refers to tims China’s plan to increase the number of stores to more than 2750 and establish a “profitable chain network” by 2026. In the same year, the company expects sales to increase to more than 7 billion yuan and the profit margin to more than 19%.
According to the guidelines disclosed at the end of last year, TIMS China expects the annual revenue of 2021 to be US $103.9 million (about 665 million yuan); After adjustment, the EBITDA (profit before tax, interest, depreciation and amortization) of the store is US $5.7 million; The adjusted EBITDA of the enterprise has a loss of US $14.7 million and is expected to turn loss into profit in 2023.
While announcing the new financing commitments, xiaoshidai also noticed that tims China’s listing plan has also been greatly adjusted.
According to the release, TIMS China and silver crest have revised the merger agreement, including reducing the entry valuation of tims China from US $1688 million to US $1.4 billion; Extend the termination date of the merger agreement to June 30, 2022 to allow sufficient time for the securities and Exchange Commission to complete its review of the proposed merger.
Although the listing may have to wait a little longer, TIMS China has still made a high profile to accelerate the pace of expansion, for example, by opening more small stores to grab the market.
As introduced by xiaoshidai, TIMS China announced a strategic cooperation with Metro China last November, and tims China will become the exclusive cooperative coffee brand of Metro China in China. Under this cooperation, TIMS China will continue to open tims go Jiefeng stores in Metro China stores all over the country.
“In the next five years, we plan to open more tims go Jiefeng stores in Metro’s stores in China in a planned way to improve our brand awareness, revenue and profit.” Tims China CEO Lu Yongchen said in a briefing.
According to tims China’s plan, TIMS go, which focuses on delivery and takeout, will also occupy a considerable part of its stores in the future. According to the data disclosed by the company in October last year, TIMS go is expected to open to 617 in China by 2026, accounting for more than 20% of the total number of stores. In addition, TIMS go also increased year by year from 2021 to 2026.
Not only are they busy expanding stores and listing, but tims China has also invited more executives, including “old faces” from former Yum! Brands and McDonald’s. Xiaoshidai introduced that tims China disclosed three management for the first time in the performance document released last year: Chief Financial Officer Dong (Albert) Li, general manager of South District Anny Li and general manager of West District Cory Yu.
Among them, Dong (Albert) Li is said to be the first CFO since tims entered China, leading the listing of many companies. The two regional general managers, Anny Li and Cory Yu, are from Yum and McDonald’s respectively.
Statistics show that the capital of China’s coffee chain market is surging, and the capital demand of the industry is becoming larger and larger.
Even if it can be successfully listed, TIMS China obviously has to face the “encirclement and interception” of many strong players and novices, including Starbucks, McDonald’s and Lavazza backed by Yum China. There are also young players such as manner, seesaw and M stand who continue to “attract money” in the capital market to accelerate their expansion.
The 2021 China foreign food coffee report obtained by xiaoshidai from yingminte shows that the expansion strategy of key enterprises and the influx of capital release positive signals to the market, resulting in an increase in the total number of stores.
Mintel predicts that the total number of foreign coffee stores will reach 136000 in 2021, with a growth rate of 5.4%. In the next five years, the average annual compound growth rate of the market is expected to be 10.9%, reaching RMB 75.8 billion in 2026.
“Of course, from start-ups to Starbucks, many people see opportunities.” Tims CEO Lu Yongchen once said. He believes that in this highly competitive industry, the company’s advantages lie in digitization, product power, cost performance and so on.