SINGAPORE: In the wake of the shutdown of Oatly’s factory in Singapore, which resulted in 59 employees being laid off, Yeo Hiap Seng said it will be receiving $32 million as exit compensation.
An announcement on its website on Thursday (Dec 19) said that Yeo Hiap Seng and Oatly had entered into an Exit Agreement to dissolve their tie-up to produce Oatly beverages in Singapore. This agreement includes the compensation to be paid to Yeo Hiap Seng, which has partnered with Oatly since 2019.
While Yeo Hiap Seng will no longer be producing oat milk for Oatly, the company will still be distributing Oatly products in Malaysia and Singapore.
Based on the agreement between the two companies, Yeo Hiap Seng will be receiving an exit compensation amounting to S$32 million. The compensation will be in instalments to be paid in full by January 2027.
“Closure of the Singapore Oatly Facility is not expected to have a material impact on the net tangible assets” per share of Yeo Hiap Seng, the company wrote, adding that its balance sheet remains strong.
On Wednesday (Dec 18) Oatly announced in a media release that it would be closing its Singapore facility after three years of operations. The largest firm manufacturing oat-based drinks across the globe explained that the decision is aimed at enhancing the company’s “future cost structure and reducing future capital expenditure requirements.”
Read related: Oatly announces closure of Singapore factory, impacting 34 employees
Its factory commenced operations in October 2021 upon partnering with local beverage giant Yeo Hiap Seng to produce oat milk for the region. Oatly had invested S$30 million for its facility in Singapore.
At first, it was announced that 34 local employees would be affected by the shutdown of the factory. However, Yeo Hiap Seng later added that an additional 25 workers would also be laid off as the company reassessed its workforce.
The company said its dismissed workers will receive severance packages based on their salary and length of service and that it had notified the Food and Beverage and Allied Industry Workers’ Union in advance, adding that discussions are being held to make sure that Singapore’s tripartite guidelines are being complied with.
Yeo Hiap Seng is also working with the National Trades Union Congress’ Employment and Employability Institute to provide support for the dismissed workers, including job matching services and career guidance as they seek new employment opportunities. /TISG
Read related: 25 more jobs cut by Yeo Hiap Seng as Oatly shuts Singapore factory