KUALA LUMPUR – With 70% of Brahim’s Food Services’ (BFS) shares still owned by the company, will it sell them to its other shareholder, Malaysia Airlines Bhd (MAB)?
BFS Group chief executive Mohd Fadhli Abdul Rahman revealed that the airline has made an offer to acquire the shares, with several other interested parties – both in and out of the aviation sector – also expressing interest.
Asked whether Fadhli foresees BFS selling off the shares, he said the decision ultimately lies in the compatibility of each party’s terms.
“It depends on the business itself. Now, our top priority is to resolve (our loans) with the bank as it is super critical, we want to honour what we commit with them,” he said in an interview with business radio station BFM 89.9 yesterday.
“That is the first step, because the 70% that MAB intends to buy out is still a long shot.
“We are still in negotiations with other suitors, it really depends on what we want and what they want.”
In March last year, OCBC Al-Amin Bank Bhd sent a letter of demand to Brahim’s Holdings Bhd (BHB) after the company defaulted on its payments. The bank said BHB has an outstanding rental sum of RM62.03 million as of February 28, 2022.
Nonetheless, Fadhli said the bank has been accommodative and understanding of BFS’ circumstances, but still provides “healthy pressure” for the company to settle their debts, which Fadhli hoped could be resolved within this month.
Meanwhile, Fadhli reiterated that BFS ended its negotiation with MAB because the parties could not reach a middle ground on the latter’s call for a convenient termination.
He also disclosed that BFS sacrificed its Bursa listing status to sustain its business when the company faced challenges to exiting the Practice Note 17/2005 (PN17) status.
He said it was “impossible” for the company to achieve the requirements set by Bursa to leave the PN17 status while still being affected by the Covid-19 pandemic, as it garnered no revenue during the period.
“With that kind of (financial) distress, the public also has no confidence to invest in you. So why maintain the (listed Bursa) status?”
Speaking on airport service company Sats Limited (Sats) divesting 49% of its stake in Brahim’s SATS Investment Holdings (BSIH) joint venture, Fadhli said it was because the company could not reach an agreement with MAB during negotiations.
With BFS’s financial distress at that time, he said the company decided to cut its losses in favour of its other investments.
While Sats reportedly divested its stake for RM10 million against a purchase value of RM218 million, he revealed that “more things happened in the background”.
Last month, Malaysia Airlines concluded its longstanding partnership with BFS and is transitioning to a new catering service on selected domestic and international routes within its network.
Transport Minister Anthony Loke said MAB is looking to fully resume its in-flight food service by November 15.
Asked whether MAB’s settlement was justified if BFS cannot live up to customers’ standards as an in-flight catering monopoly, Fadhli said the company has 35 other international airlines as customers.
“Having your lunch by the roadside as compared to lunch in fine dining (areas) – the pricing will be different,” he said.
He added that foreign carriers pay up to 40 to 50% more than the local airline, and even pay double the price for certain products. – October 19, 2023