RB 23/2007 Joint Venture Agreements with Starbucks

The Management Board of AmRest Holdings N.V. (“AmRest”) informs about signing, on the 25th of May 2007, the Joint Venture Agreements between AMERICAN RESTAURANTS SP. Z O.O (“AmRest Poland”) and STARBUCKS COFFEE INTERNATIONAL, INC. (“Starbucks”) with regards to entering into cooperation relating to the development and operation of Starbucks stores in Poland, the Czech Republic and Hungary (the “Territory”).

The parties resolved to establish three separate Joint Venture Companies, one for each of the 3 countries in the Territory. AmRest Poland shall contribute eighty-two percent (82%) and Starbucks eighteen percent (18%) of the capital to the JV Companies. In the third and fourth year after the formation of the JV Companies Starbucks shall have the right and option to increase its participation in the JV Companies by acquiring additional shares (up to 50%) in case of AmRest’s failure in opening and operating a minimum number of Starbucks stores in the Territory. In the fifth and ninth year Starbucks shall have an unconditional option to increase its stake up to 50%. In case of a conflicting acquisition or a change of control of AmRest and any of its parent companies, Starbucks shall have the right to increase the participation in the JV Companies up to 100% by acquiring shares from AmRest Poland at the price agreed between the parties based on a valuation of the JV Companies.

The JV Companies will be granted the rights and license to develop, own and operate Starbucks stores in Territory by signing Area Development and Operation Agreements, Shared Services Agreements, Service Agreements and Supply Agreements for each country (collectively, the “Agreements”). The Agreements, the final versions of which have been agreed upon, have a term ending on May 31, 2022, with an option to extend the term of the Agreements for an additional 5 years upon the fulfilment of certain conditions. The JV Companies will be the only entity with the right to develop and operate Starbucks stores in the Territory during the term of the Agreements with  non-exclusive rights to certain institutional locations. 

The key fees and costs to be borne by the  JV Companies will be:

-          the development and service fees for initial operation support equal to an amount of USD 950 thousand  for the Territory,

-          the initial franchise fee of USD 25 thousand for each Starbucks store,

-          the continuing licensing and service fee equal to 6% of sales revenues of each Starbucks store,

-          a local marketing spend obligation is to be mutually agreed annually.

The JV Companies agrees to open and operate Starbucks stores in strict accordance with the development schedule which includes the minimum numbers of openings in each year within the Agreements’ period. If JV Company fails to meet the development obligations Starbucks will have the right to charge a development default fee or to terminate the Agreements. The Agreements include the provision concerning the purchase of coffee and other basic supplies either from Starbucks or other approved or designated suppliers.

AmRest Holdings N.V. guarantees to Starbucks fulfillment of all obligations on the part of  AmRest Poland.

Legal Act:

§ 5.1.3 of Regulation of the Minister of Finance on current and periodic information to be published by issuers of securities, dated October 19th 2005