Cooks Global Foods seeks independent directors ahead of NXT listing

Mike Hutcheson is currently the only independent director on the board.

Cooks Global Foods [NZX:CGF], owner of the master franchise rights for Esquires Coffee Houses outside New Zealand and Australia, is seeking two independent directors before a potential listing on the NXT market.

Mike Hutcheson is currently the only independent director on the board. The other two directors are executive chairman/shareholder Keith Jackson and shareholder Andrew Kerslake, who was re-elected at the company's annual general meeting in Auckland today. Esquires NZ founders Stuart and Lewis Deeks resigned from the board last month as they exit the company they built up from 2002.

Jackson said a date has yet to be set for special general meeting to be held before the end of October for shareholders to vote on a shareholding rejig that involves selling 35 million shares at 12.8c apiece to its Chinese joint venture partner, supermarket chain Jiajiayue Group. Mr Jackson and JJY will jointly acquire the Deeks' existing 40% stake in Cooks for 5c a share, for a total cost of $6.8 million.

Once the transaction is completed, JJY will own 25% of the company and Mr Jackson 35%.

A further $9 million will be raised in a public offer in October at the same or a very similar price to that paid by JJY, said Jackson. He said that money will be used as a "bit of a war chest" for further international growth. The thinly-traded Cooks' shares last changed hands on the NZ Alternative Market at 12.5c a share.

Cooks wants to migrate from the soon-to-be-defunct NZAX but its turnover is too small for NZX main board listing and it needs more independent directors to list on the NXT. Mr Jackson said the long-term plan is to have a dual NZX main board listing and one on an Asian exchange such as Singapore, Hong Kong or Shanghai, to encourage more international investors.

Cooks Global Foods has 78 Esquires stores in four key markets - UK/Ireland, China, the Middle East, and Canada, of which 12 are company-owned. The company reported a full-year loss of $3.99 million in the year ending Mar.31 and Jackson said break-even point for profitability is 175 stores, which it doesn't expect to reach until the 2018 financial year.

Currently only a third of income comes from master franchise fees and royalty income from existing stores.

Mr Jackson said future store growth would be mainly concentrated in China, where it has 21 stores and partnerships with two major supermarket chains, JJY and Better Life Commercial China Share Co, which operates under the Chinese name Bu Bu Gao. The US, where it doesn't currently operate, is another big opportunity, he said.

Cooks has recently signed new master franchise deals in Indonesia, where the first store is due to open in Jakarta next month, and in Egypt and Jordan.

The master franchise rights for New Zealand and Australia were sold by the Deeks to Australian-listed Retail Food Group for $11.6 million in 2011. Jackson said he'd had unsuccessful discussions with RFG, which owns a number of coffee chain brands including Gloria Jeans, about buying the rights back so the Esquires brand was all under one ownership globally. RFG's website said it had 43 New Zealand and Australia Esquires stores with several up for sale.