Dean & Deluca owner, Thailand's Pace defaults on debt of $86 mln

[Jonathan Fairfield]

Dean & Deluca owner, Thailand's Pace defaults on debt of $86 mln

 

Image: Wikipedia

 

BANGKOK, Oct 21 (Reuters) - Thai property firm Pace Development Pcl, owner of the high-end grocer Dean & Deluca, said on Monday it was in default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

 

The announcement comes weeks after Dean & Deluca closed its flagship store in New York and other locations in Bangkok.

 

Siam Commercial Bank Pcl (SCB) notified the firm, which bought the grocer franchise in 2014 for $140 million, to pay outstanding debt by Nov. 4, Chief Executive, Sorapoj Techakraisri, said in a statement to the Stock Exchange of Thailand.

 

Pace Development will negotiate with Siam Commercial Bank to prepare a debt management plan so that it would be able to carry out operations and maintain competitiveness, Sorapoj said.

 

SCB’s shares slid 3% against the broader index drop of 0.6%

 

The company’s construction projects have been suspended, but its food and beverage operations were not affected, he added.

 

In 2018, Pace sold here the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)

 

(Reporting by Chayut Setboonsarng; editing by David Evans)

 

-- © Copyright Reuters 2019-10-21

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[worgeordie]

I am sure SCB will have collateral from Pace to cover

any default on the loan ! ????

regards Worgeordie

[BobbyL]

Never released they were actually owned by a company here. The food selection is decent, especially at their Sathorn branch, but the prices were never going to be popular here. 

[billd766]

quote "BANGKOK, Oct 21 (Reuters) - Thai property firm Pace Development Pcl, owner of the high-end grocer Dean & Deluca, said on Monday it was in default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

In 2018, Pace sold here the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

I am confused. How can a company default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

 

Yet only last year they sold the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

Where dis the other 11 bn baht go?

 

[ExpatOilWorker]

28 minutes ago, billd766 said:

quote "BANGKOK, Oct 21 (Reuters) - Thai property firm Pace Development Pcl, owner of the high-end grocer Dean & Deluca, said on Monday it was in default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

In 2018, Pace sold here the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

I am confused. How can a company default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

 

Yet only last year they sold the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

Where dis the other 11 bn baht go?

 

10 billion baht went this way:

Mr Sorapoj said Pace's board of directors also approved the purchase of shares in Pace Project One and Pace Project Three in the proportion of 49% and 48.7% respectively from Apollo Asia Sprint Holding Company Ltd and Goldman Sachs Investments Holdings Asia Ltd for the total amount of 10 billion baht, effectively ending Pace's commitments to Apollo and Goldman.

 

[DrTuner]

1 hour ago, ExpatOilWorker said:

10 billion baht went this way:

Mr Sorapoj said Pace's board of directors also approved the purchase of shares in Pace Project One and Pace Project Three in the proportion of 49% and 48.7% respectively from Apollo Asia Sprint Holding Company Ltd and Goldman Sachs Investments Holdings Asia Ltd for the total amount of 10 billion baht, effectively ending Pace's commitments to Apollo and Goldman.

Nice little exit for Apollo & Goldman. How many of the directors of Pace sat on their boards as well...

Edited October 21, 2019 by DrTuner

[DLock]

I doubt he is particularly concerned.

 

Owe the bank $10,000 and its your problem, owe them USD$86million, and it's theirs.

[djayz]

8 minutes ago, DLock said:

I doubt he is particularly concerned.

 

Owe the bank $10,000 and its your problem, owe them USD$86million, and it's theirs.

Or the tax payers... as we've seen in numerous Western countries. 

[RichardColeman]

Yeah, about those NPLs

[NCC1701A]

<deleted>... they had good sandwiches.

[kingstonkid]

The thing is that this was a company that thought it could win in the US against starbucks and lost.  As we all know the prices were high yes it was good coffee and the food wsa good but the prices were just too high considering atht there are many other options.

 

This is the first a lot of the companies that are trying for the high end HISO are going to start falling also if they are not located in the HISO Stores

[phkauf]

They found out the hard way that there is ACTUAL competition in markets outside of Thailand and their prices were out of line with the markets. Even prior to Pace's takeover, D&D prices in NYC were high but they didn't have as many competitors as they do now. They failed to adjust and that's why they went teets up.

I also think their property business must be struggling, because they could have carried the D&D debt if things were good. This just might be the canary in the coal mine for the Real Estate market here.

 

[thaiowl]

Pace are also the developers of Mahasamutr in Hua Hin  soi 112. Looks like that is also struggling, surprise, surprise.

https://news.thaivisa.com/article/19279/mahasamutr-hua-hin-to-be-turned-into-wellness-hotel-and-resort

[Fex Bluse]

From a broad perspective, Thailand is simply not a country where this type of high end store works.

 

Thailand is a country where 90% or higher are

• eating 30 baht fried pork street-side
• whilst breathing in black toxic bus fumes,
• whilst scaring roaches and rats away from the plastic chairs
• which are balancing precariously on the unsteady, movable pavements

 

There is effectively no middle class in Thailand to support such luxury on a regular basis.

 

And the Thai/Chinese elite seem to do their best to funnel all the wealth to a very small number of families so that the other 90%+ remain dirt poor.

 

Does not work.

 

Edited October 22, 2019 by Fex Bluse

[newatthis]

20 hours ago, worgeordie said:

I am sure SCB will have collateral from Pace to cover

any default on the loan ! ????

regards Worgeordie

I sure hope so.

[Cake Monster]

21 hours ago, billd766 said:

quote "BANGKOK, Oct 21 (Reuters) - Thai property firm Pace Development Pcl, owner of the high-end grocer Dean & Deluca, said on Monday it was in default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

In 2018, Pace sold here the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

I am confused. How can a company default of 2.6 billion baht ($86 million) with one of the nation’s largest lenders as of Oct. 18, sending its shares down 25%.

 

Yet only last year they sold the Bangkok's tallest building, now named King Power MahaNakhon, for 14 billion baht to duty-free retailer and owner of the Premier League football club Leicester City, King Power . ($1 = 30.2600 baht)".

 

Where dis the other 11 bn baht go?

 

Any guess,s where the 11 Bn have gone ?

[ExpatOilWorker]

14 minutes ago, Cake Monster said:

Any guess,s where the 11 Bn have gone ?

Yes, see post #5.

[billd766]

2 hours ago, Cake Monster said:

Any guess,s where the 11 Bn have gone ?

It didn't come my way.

[TallGuyJohninBKK]

On 10/21/2019 at 5:15 PM, Jonathan Fairfield said:

The company’s construction projects have been suspended, but its food and beverage operations were not affected, he added.

 

Last time I checked, the D&D location at Central Embassy seemed to be operating as normal, as did the smaller coffee-desert location across the street.

 

 

[jayboy]

23 hours ago, Fex Bluse said:

From a broad perspective, Thailand is simply not a country where this type of high end store works.

 

Thailand is a country where 90% or higher are

• eating 30 baht fried pork street-side
• whilst breathing in black toxic bus fumes,
• whilst scaring roaches and rats away from the plastic chairs
• which are balancing precariously on the unsteady, movable pavements

 

There is effectively no middle class in Thailand to support such luxury on a regular basis.

 

And the Thai/Chinese elite seem to do their best to funnel all the wealth to a very small number of families so that the other 90%+ remain dirt poor.

 

Does not work.

 

While not disputing the facts in your post I question the logic of your conclusion.There is a sufficiently large number of fashion conscious and wealthy people in Bangkok to justify high end outlets.With Dean and Deluca I suspect the problem was poor marketing.

[smutcakes]

19 minutes ago, jayboy said:

While not disputing the facts in your post I question the logic of your conclusion.There is a sufficiently large number of fashion conscious and wealthy people in Bangkok to justify high end outlets.With Dean and Deluca I suspect the problem was poor marketing.

Completely agree. There is a D&D downstairs in the office where i work. The price is neither here nor there. For me i love the sandwiches but they are simply to unhealthy to eat on a daily basis. 

[Fex Bluse]

56 minutes ago, jayboy said:

While not disputing the facts in your post I question the logic of your conclusion.There is a sufficiently large number of fashion conscious and wealthy people in Bangkok to justify high end outlets.With Dean and Deluca I suspect the problem was poor marketing.

I agree with you that there are plenty of Thais who appreciate the opportunity to show off (even if they actually can't properly afford it). 

 

But, an issue here is cultural in nature. 

 

Thais (and Chinese) generally appreciate a luxury not for any inherent qualities but rather for a thing's ability to give them face. 

 

It means that once an initial fad/fascination with a thing has worn off, the already small population cannot easily sustain the brand. After all, they already posted the BIG FACE photos on Facebook of them eating a Dean and Deluca sandwich... 

 

Westerners, by contrast, tend to derive value from a different calculus, one that values the thing itself, and less so for what status it confers on us. 

 

A good example of all this is in the acute scarcity of any longlived local Thai luxury brands. Even China has them. Thailand - effectively none. 

 

Edited October 23, 2019 by Fex Bluse

[TallGuyJohninBKK]

23 hours ago, Fex Bluse said:

A good example of all this is in the acute scarcity of any longlived local Thai luxury brands. Even China has them. Thailand - effectively none. 

 

 

That's an interesting point!  Hadn't really considered that before. I'm thinking and thinking...and.... can't come up with a thing!

 

My wife happens to work for some very very rich Chinese-Thais...  And when they buy material goods, it's often more from China than Thailand. Though that also may reflect an ingrown preference for their ancestral home country.

 

[ExpatOilWorker]

On 10/22/2019 at 6:48 PM, TallGuyJohninBKK said:

 

Last time I checked, the D&D location at Central Embassy seemed to be operating as normal, as did the smaller coffee-desert location across the street.

 

 

They have until November 4th to restructure the loans.