Business
HF Foods Completes the Purchase of 10 Industrial Warehousing Properties
Transaction to eliminate lease expense (estimated to increase to $6.5 million over the next two to three years) and improve EBITDA by approximately $2.8
About this update from Hf Foods Group Inc.
[{"type":"text","content":"Transaction to eliminate lease expense (estimated to increase to $6.5 million over the next two to three years) and improve EBITDA by approximately $2.8 million in 2020 compared to 2019\nGREENSBORO, N.C., Jan. 21, 2020 (GLOBE NEWSWIRE) -- HF Foods Group Inc. (NASDAQ: HFFG), a leading food distributor to Asian restaurants across the Southeast, Pacific and Mountain West regions of the United States, has completed the purchase of 10 warehousing properties through its wholly owned subsidiary B&R Global Holdings, Inc. (“BRGH”) for an aggregate consideration of $101.3 million.\n Under the terms of the purchase agreement, BRGH has acquired a 100% stake in nine independent property holding companies. The holding companies collectively control 10 warehousing properties, totaling 642,757 sq. ft. (including 223,500 sq. ft. of cold and freezer storage space), which were previously owned by B&R Group Realty Holding LLC (“BRGR”), a real estate holding company that is 8.91% owned and managed by Peter Zhang, co-CEO of HF Foods Group. CBRE Valuation and Advisory Services independently appraised 9 of the 10 the properties as having an aggregate value of $100,755,000. The tenth property was mutually valued by BRGH and BRGR for the purposes of this transaction at $514,700, which is below book value. The principal lenders for the transaction were J.P. Morgan Chase Bank and Comerica Bank (the “Syndicate”). A special transactions review committee, composed of the company’s independent directors, reviewed and approved the transaction and the related financing on behalf of HF Foods Group’s board. The transaction is approximately 75% ($75.6 million) financed by the Syndicate. Additionally, BRGH has issued a $7.0 million Unsecured Subordinated Promissory Note (the “Note”) to BRGR. The balance of the consideration ($18.7 million) was financed by drawing on the Company’s line of credit. The Note matures on January 17, 2030 and carries an interest rate of 6% per annum. The Note is repayable in whole or in part at any time prior to the maturity date with no prepayment penalties, subject to meeting the Syndicate’s loan covenant requirements. “With the closing of this transaction, we have gained control of the warehousing properties on terms that we believe are beneficial to our shareholders,” said Zhou Min Ni, chairman and co-CEO of HF Foods. “These are proper...