Yeo Hiap Seng to receive compensation of $32 million after Oatly terminates production deal
Yeo Hiap Seng will continue to distribute Oatly products in Singapore and Malaysia
Yeo Hiap Seng will receive a $32 million "exit compensation" after Oatly terminates a 2019 "co-packing" agreement to produce products under the Swedish brand.
As a result, YHS will stop production of oat milk and will lay off 25 employees.
However, YHS will continue to distribute Oatly products in Singapore and Malaysia.
According to YHS, the compensation will be paid in full by Jan 2027 and consists of assets buy out, compensation for order obligations, repayment for loans and future lease payables.
YHS estimates it will recognise a net other income of around $10 million in the FY2024 ending December 31 and another $0.6 million in FY2025.
YHS adds that it will review if asset impairment is needed but does not see a "significant" impact on its NTA for the current FY.
"The company wishes to reiterate that the group’s balance sheet remains strong and YHS will continue to pursue inorganic and organic growth opportunities for the group," adds YHS.
Yeo Hiap Seng shares changed hands at 58 cents as at 10.10 am.
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