Beston Global Food Co’s Thai supply deal with KCG Corp hits a snag

A supply agreement between Australia’s Beston Global Food Co. and KCG Corp. in Thailand encountered an obstacle.

In an update to the Sydney-listed dairy and dairy producer’s annual results this week, Beston Global Food (BFC) said the planned arrangement had been withdrawn. Further talks are due to take place in Bangkok later this month.

The envisaged long-term supply deal, reached in June in the form of a memorandum of understanding, would have seen Bangkok-based KCG take a 12% stake in BFC via the transfer of 100,000 shares at the price A$10 million (then $6.8 million). In return, KCG would distribute BFC’s dairy, meat and vegetable proteins in Thailand.

Due diligence was completed on August 31. However, BFC said “several questions remain open” regarding the terms and conditions.

“Until these matters can be resolved, BFC has informed KCG that it has withdrawn its offer under the terms of the Memorandum of Understanding to make a strategic equity placement to KCG,” the Australian company said. “Any supply agreement of this type requires that the interests of both parties are properly balanced, in order to ensure the longevity and viability of the agreement.”

just food has contacted KCG for comment.

BFC already sells in Southeast Asia, including Thailand, as well as the Philippines, Vietnam and Malaysia, and further afield in China. She also recently obtained new contracts in Japan.

The Australian company is a supplier of mozzarella, and also produces cream, butter, whey powder and lactoferrin protein. Its cheese brands include Mable’s and Edwards Crossing.

Revenue for the year to June 30 rose 24% to A$139 million, BFC said. However, net profit before tax was in the red at AUD 25.7 million, compared to a loss of AUD 29.2 million a year earlier.

The net loss remained stable at 21.7 million AUD compared to 21.8 million AUD.

KCG, on the other hand, was originally established in Thailand in 1958 as Kim Chua Trading. The company runs its own manufacturing of dairy products, biscuits, biscuits and bakery ingredients. It has also recently expanded into meat, seafood and canned foods.

KCG’s own brands include Allowrie and Imperial, the company serving retailers in Thailand such as Tesco and Makro, as well as convenience store chains like 7-Eleven.

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