<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Harsh lessons learnt from Brookstone acquisition
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE record shows he took the blows; but he wasn't able to, as Frank Sinatra might say, do it his way.
But Osim founder Ron Sim says that if he had a chance to acquire American retailer Brookstone again, he would.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>ONE DRIVER, ONE VISION
'Always have full control. Our business has always been successful because it's always been one way.
Sure, there's always going to be a difference of opinion (on a board) but at the end of the day, there must be one driver to drive the company with one vision.'
</TD></TR></TBODY></TABLE>This time, however, he would exercise more control and tell his joint venture partners: 'Take a smaller stake and do it my way.'
With his thinning salt and pepper hair and friendly smile, Mr Sim does not come across as a megalomaniac or control freak. Yet he speaks of maintaining 'full control' in any company he acquires now, and reiterates this at least three times during this interview.
Osim bought Brookstone, the American retail chain, in 2005 but had to write off millions last year after it failed to get the company to work.
It was, as one brokerage here put it, 'a hopeless investment'.
Mr Sim, 50, acknowledges that the bruising experience delivered some harsh lessons and admits that differences in opinion in the board may have led to Osim's inability to turn the American unit to profitability.
In 2005, Osim led a consortium with Temasek Holdings and US private equity firm JW Childs Associates to acquire Brookstone. Osim borrowed $100 million to acquire for itself a 55 per cent stake in the US$456 million (S$662 million) acquisition.
Brookstone's earnings from operations grew from $32 million in 2005 to $45 million in 2006 and then $55 million in 2007, says Mr Sim.
Things looked to be going well, but the financial crisis hit US consumer confidence and Brookstone went into the red for the first three quarters of last year.
Osim announced it was writing off its entire investment of $77.31 million for the financial year ended last Dec 31.
That sent the firm into a loss of $99.4 million for the year, a sharp reversal from 2007's $3.1 million net profit.
Mr Sim, who holds a 59.4 per cent stake in the mainboard-listed company, now laments that his friends tease him about looking 'so old' in recently published photographs.
He tells The Straits Times: 'Private equities are very good companies in terms of financial engineering, because most of them make an acquisition and wait for capital gain. They prefer not to change too many things, but to take the safe road, cut and paste.
'But we are operators. We build companies for the long term. We would first change the leadership of the company, then the culture, system and habits.'
Mr Sim denies that the partnership failed, but emphasised that interests either have to be aligned or decided by a leader.
'My advice to companies is to always have full control. Our business has always been successful because it's always been one way,' he said. 'But it's not hell break loose, lah. Otherwise we wouldn't have had three years of positive EBITDA (earnings before interest, taxes, depreciation and amortisation).'
Pressed on what he would have done differently, he says: 'I would have expected to grow the business faster and get more chairs out quicker.'
But he is eager to put the Brookstone episode behind him. For starters, he has appointed ex-DBS Group Holdings chief executive Jackson Tai as chairman.
'It's good to have an ex-banker to be taking care of the company because you want him to deal with bankers and that's the way it should be,' he says.
Although Osim is back in the black after four quarters - it posted a profit of $3.2 million for the three months ended March 31 this year - Mr Sim admits Brookstone is still not making money.
He attributes this to the fact that the company has to pay interest in excess of US$30 million every year to bondholders and preferred shareholders in the US.
He also feels that if Brookstone had managed to list on the Nasdaq in the second quarter of last year as originally planned, the group 'could have been able to pay down the debts and not pay interest any more'.
But Mr Sim is also finding cheer amid the latest numbers coming out of Brookstone. Although sales on the whole have dropped 30 to 40 per cent, they are up 10 per cent against the whole-year plan the board has set out, he says.
Flashing a stoic grin, he adds: 'The beauty of our business is that... we create value and innovation for the well-being of people.'
He reiterates: 'I believe that the next 10 years will be stronger than the last 10 years. I'm 50 years old so there's a long way to go. I'm never retiring.' MICHELLE TAY
I LOSE even my blas and panties also NO REGRET One! *hee*hee*
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE record shows he took the blows; but he wasn't able to, as Frank Sinatra might say, do it his way.
But Osim founder Ron Sim says that if he had a chance to acquire American retailer Brookstone again, he would.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>ONE DRIVER, ONE VISION
'Always have full control. Our business has always been successful because it's always been one way.
Sure, there's always going to be a difference of opinion (on a board) but at the end of the day, there must be one driver to drive the company with one vision.'
</TD></TR></TBODY></TABLE>This time, however, he would exercise more control and tell his joint venture partners: 'Take a smaller stake and do it my way.'
With his thinning salt and pepper hair and friendly smile, Mr Sim does not come across as a megalomaniac or control freak. Yet he speaks of maintaining 'full control' in any company he acquires now, and reiterates this at least three times during this interview.
Osim bought Brookstone, the American retail chain, in 2005 but had to write off millions last year after it failed to get the company to work.
It was, as one brokerage here put it, 'a hopeless investment'.
Mr Sim, 50, acknowledges that the bruising experience delivered some harsh lessons and admits that differences in opinion in the board may have led to Osim's inability to turn the American unit to profitability.
In 2005, Osim led a consortium with Temasek Holdings and US private equity firm JW Childs Associates to acquire Brookstone. Osim borrowed $100 million to acquire for itself a 55 per cent stake in the US$456 million (S$662 million) acquisition.
Brookstone's earnings from operations grew from $32 million in 2005 to $45 million in 2006 and then $55 million in 2007, says Mr Sim.
Things looked to be going well, but the financial crisis hit US consumer confidence and Brookstone went into the red for the first three quarters of last year.
Osim announced it was writing off its entire investment of $77.31 million for the financial year ended last Dec 31.
That sent the firm into a loss of $99.4 million for the year, a sharp reversal from 2007's $3.1 million net profit.
Mr Sim, who holds a 59.4 per cent stake in the mainboard-listed company, now laments that his friends tease him about looking 'so old' in recently published photographs.
He tells The Straits Times: 'Private equities are very good companies in terms of financial engineering, because most of them make an acquisition and wait for capital gain. They prefer not to change too many things, but to take the safe road, cut and paste.
'But we are operators. We build companies for the long term. We would first change the leadership of the company, then the culture, system and habits.'
Mr Sim denies that the partnership failed, but emphasised that interests either have to be aligned or decided by a leader.
'My advice to companies is to always have full control. Our business has always been successful because it's always been one way,' he said. 'But it's not hell break loose, lah. Otherwise we wouldn't have had three years of positive EBITDA (earnings before interest, taxes, depreciation and amortisation).'
Pressed on what he would have done differently, he says: 'I would have expected to grow the business faster and get more chairs out quicker.'
But he is eager to put the Brookstone episode behind him. For starters, he has appointed ex-DBS Group Holdings chief executive Jackson Tai as chairman.
'It's good to have an ex-banker to be taking care of the company because you want him to deal with bankers and that's the way it should be,' he says.
Although Osim is back in the black after four quarters - it posted a profit of $3.2 million for the three months ended March 31 this year - Mr Sim admits Brookstone is still not making money.
He attributes this to the fact that the company has to pay interest in excess of US$30 million every year to bondholders and preferred shareholders in the US.
He also feels that if Brookstone had managed to list on the Nasdaq in the second quarter of last year as originally planned, the group 'could have been able to pay down the debts and not pay interest any more'.
But Mr Sim is also finding cheer amid the latest numbers coming out of Brookstone. Although sales on the whole have dropped 30 to 40 per cent, they are up 10 per cent against the whole-year plan the board has set out, he says.
Flashing a stoic grin, he adds: 'The beauty of our business is that... we create value and innovation for the well-being of people.'
He reiterates: 'I believe that the next 10 years will be stronger than the last 10 years. I'm 50 years old so there's a long way to go. I'm never retiring.' MICHELLE TAY
I LOSE even my blas and panties also NO REGRET One! *hee*hee*
