Thai owner seeks to raise $60m to rescue Dean & DeLuca
The Thai owner of the gourmet grocery and café brand Dean & DeLuca plans to issue $60m of long-term debt in a bid to revive the US fortunes of a chain that was a pioneer in selling pricey curated cheeses, olive oils and cakes.
Sorapoj Techakraisri, chief executive of parent company Pace Development, told the Financial Times it had no plans to sell Dean & DeLuca, which it acquired in 2014 but has since been laid low by high costs and online competition.
He said Pace would use proceeds from the sale of the debentures to pay back some of the money owed to banks, artisanal patissiers and other suppliers left with unpaid bills because of a cash crunch at the Bangkok-based property group.
“The first priority in the US is to bring in new money to pay off those creditors that we owe money to and then slowly start rebuilding the brand,” Mr Sorapoj said ahead of his first trip to the US since Dean & DeLuca’s crisis deepened over the summer.
Dean & DeLuca has already closed most of its stores in the US and faces lawsuits from angry suppliers. The US chain’s mounting losses mark a rare high-profile failure of an overseas acquisition for Thailand, whose Sino-Thai family conglomerates are big investors abroad, but typically attract little publicity. Pace reported a second-quarter net loss of Bt726m ($24m).
“Our plan now is to raise money at the Pace level, and also to continue with two real-estate projects that we have,” Mr Sorapoj said, adding that because of its losses in the US, Pace had frozen work on nearly completed high-rise condominium developments in Bangkok and Hua Hin.
“More money will come out at completion, and hopefully by then the US is more stable, and we can start thinking about growing again,” Mr Sorapoj said.
The problems have earned Pace much bad press in the US.
Dean & DeLuca stores, 2014 (of which 11 were in the US)
When Pace bought the food emporium brand in 2014 for $140m from US financial investors, Mr Sorapoj spoke of expanding it to hundreds of stores in Asia and elsewhere in a café/restaurant format.
The Thai chief “fell in love with the brand” when negotiating to open Thailand’s first Dean & DeLuca store at Pace’s MahaNakon development, a landmark high-rise condo building it sold to Thai conglomerate King Power last year as its financial problems mounted.
When asked what went wrong, a weary looking Mr Sorapoj said the story was “pretty complicated, and not fun”. Smoking a vape, he appeared to hold back tears at times as he spoke.
Dean & DeLuca stores, August 2019 (of which 4 are in the US)
Pace had its own trouble at home in 2017 because of “a panic” on the market for bills of exchange, a short-term debt instrument.
While the brand has expanded in Asia, mostly through franchising, Dean & DeLuca is down to just two US stores in New York, including its SoHo flagship at the corner of Prince Street and Broadway, and two franchised outlets in Hawaii, from 11 at the time of acquisition.
Pace earlier this month closed a rights offering in which it aimed to raise $80m, but had to scale back to $20m “when the bad news hit from the US”, Mr Sorapoj said.