Yeo Hiap Seng's Exit Compensation

SINGAPORE: Following the recent announcement of Oatly's factory closure in Singapore, Yeo Hiap Seng is poised to receive a substantial exit compensation of S$32 million. This closure, which impacts 59 employees, marks the end of a significant partnership that began in 2019, aimed at producing oat beverages for the Southeast Asian market.

Details of the Exit Agreement

In a statement released on December 19, Yeo Hiap Seng confirmed that they and Oatly had entered into an Exit Agreement, effectively dissolving their collaborative efforts to manufacture Oatly's oat milk in Singapore. Despite halting production, Yeo Hiap Seng will continue to distribute Oatly products in both Malaysia and Singapore.

Compensation Payment Structure

The exit compensation will be disbursed in installments, with full payment expected by January 2027. Yeo Hiap Seng assured stakeholders that the closure of the Oatly facility will not materially affect its net tangible assets per share, emphasizing the company’s robust financial standing even amidst these changes.

Oatly's Decision to Close the Factory

On December 18, Oatly revealed to the public that it would shut down its Singapore operations after just three years in business, citing the need to improve its future cost structure and reduce upcoming capital expenditures as driving factors for the decision. The Singapore factory had launched operations in October 2021, after Oatly's investment of S$30 million.

Impact on Employees

Initially, Oatly estimated that 34 employees would be directly affected by the factory closure. However, Yeo Hiap Seng later reported that an additional 25 positions were also eliminated during a workforce reassessment, bringing the total laid-off staff to 59.