By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 7, 2012
KUALA LUMPUR: Brahim's Holdings Bhd has shelved plans to buy the rest of Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG) as it is seeking clarification from Malaysia Airlines (MAS) on its intention to renegotiate a catering agreement.
MAS issued a letter to LSG Sky Chef-Brahim's Sdn Bhd (LSGB) on its intention to renegotiate the terms of the agreement to realign the objectives of the parties under the catering agreement. But it did not provide specific terms about the relevant provisions of the agreement that it intends to renegotiate.
Brahim's group executive chairman Datuk Ibrahim Ahmad said at its extraordinary general meeting (EGM) yesterday that it had been advised by several legal parties that the terms and the obligations of all parties under the agreement remained intact.
LSGB, which operates the in-flight catering business, is 70 per cent own by BLSG and 30 per cent by MAS. Brahim's owns 51 per cent of BLSG and the rest is held by LSG Asia GmbH, a company owned by Deutsche Lufthansa AG.
BLSG has a 25-year concession to provide catering and related services
to MAS at Kuala Lumpur International Airport (KLIA) and the Penang
airport.
Should the catering agreement be terminated, Brahim's would seek compensation from MAS as spelt out in the concession agreement, which includes a fair value with 20 per cent premium.
It is understood that the concession, which runs from 2003 to 2028, is worth about RM400 million. Based on the number of years left, the shareholders of BLSG should get about RM280 million.
Brahim's director Datuk Howard Choo told Business Times at the EGM that it is seeking clarification from MAS on several areas.
"We want to know to what extent they want to renegotiate the agreement and whether it would disrupt the concession. The term negotiate is making us uncomfortable."
"Brahim's is ready to acquire the rest of BLSG but we want clarity and certainty from MAS on the catering agreement. If all goes well we hope to conclude the deal within the next one to two months," Choo said.
Brahim's is proposing to buy LSG Asia's stake in BLSG for RM130 million cash. The deal values BLSG at RM265.31 million or historical implied per earnings ratio of 9.27 times based on Patami (profit after tax and minority interests) of RM28.63 million.
About 25 shareholders and 30 proxies at the EGM sought for the meeting to be adjourned to consider the viability of the proposed acquisition, after hearing the explanation from Brahim's on MAS' intention. It has three months to hold its next EGM.
sharen@nstp.com.my
Published in NST on September 7, 2012
KUALA LUMPUR: Brahim's Holdings Bhd has shelved plans to buy the rest of Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG) as it is seeking clarification from Malaysia Airlines (MAS) on its intention to renegotiate a catering agreement.
MAS issued a letter to LSG Sky Chef-Brahim's Sdn Bhd (LSGB) on its intention to renegotiate the terms of the agreement to realign the objectives of the parties under the catering agreement. But it did not provide specific terms about the relevant provisions of the agreement that it intends to renegotiate.
Brahim's group executive chairman Datuk Ibrahim Ahmad said at its extraordinary general meeting (EGM) yesterday that it had been advised by several legal parties that the terms and the obligations of all parties under the agreement remained intact.
LSGB, which operates the in-flight catering business, is 70 per cent own by BLSG and 30 per cent by MAS. Brahim's owns 51 per cent of BLSG and the rest is held by LSG Asia GmbH, a company owned by Deutsche Lufthansa AG.
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Should the catering agreement be terminated, Brahim's would seek compensation from MAS as spelt out in the concession agreement, which includes a fair value with 20 per cent premium.
It is understood that the concession, which runs from 2003 to 2028, is worth about RM400 million. Based on the number of years left, the shareholders of BLSG should get about RM280 million.
Brahim's director Datuk Howard Choo told Business Times at the EGM that it is seeking clarification from MAS on several areas.
"We want to know to what extent they want to renegotiate the agreement and whether it would disrupt the concession. The term negotiate is making us uncomfortable."
"Brahim's is ready to acquire the rest of BLSG but we want clarity and certainty from MAS on the catering agreement. If all goes well we hope to conclude the deal within the next one to two months," Choo said.
Brahim's is proposing to buy LSG Asia's stake in BLSG for RM130 million cash. The deal values BLSG at RM265.31 million or historical implied per earnings ratio of 9.27 times based on Patami (profit after tax and minority interests) of RM28.63 million.
About 25 shareholders and 30 proxies at the EGM sought for the meeting to be adjourned to consider the viability of the proposed acquisition, after hearing the explanation from Brahim's on MAS' intention. It has three months to hold its next EGM.
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