22 May 2012
German Group LSG Sky Chef cashing out from its in-flight catering services joint venture with Brahim’s Holdings due to MAS' cost cutting plan to review long term contracts
(BRAHIMS opening price yesterday (21.05.2012) was RM 1.11)
LSG Sky Chefs has cashed out from its in-flight catering services joint venture in Malaysia with Brahim’s Holdings Bhd.
The German group yesterday struck a deal with Brahim’s to sell its 49 per cent stake in Brahim’s LSG Sky Chefs Holdings Sdn Bhd (BLH), held via LSG Asia, for RM130 million.
The deal will also see BLH renegotiate its technical assistance contract with LSG, Brahim’s said in its statement to Bursa Malaysia yesterday.
LSG-Sky Chefs-Brahim’s (LSGB), a subsidiary of BLH, signed a lucrative 25-year exclusive catering agreement for the Kuala Lumpur International Airport in Sepang and the Penang International Airport with Malaysia Airlines (MAS) in 2003.
MAS holds a 30 per cent stake in LSGB. At the time, LSGB also signed a 25-year deal with LSG Asia for various technical assistance.
According to the Bursa announcement, a new technical assistance contract will now supercede the one in 2003, and will only see another two years of such an arrangement with LSG Asia.
“There can be no assurance that any adverse change in the business relationship between LSG Asia and LSGB or expiry of the new technical assistance agreement will not have any material and/or adverse effect on the business operations of LSGB and consequently, BLH,” Brahim’s said.
“Notwithstanding this, the board believes that management of BLH and LSGB has the relevant expertise and experience in managing and operates LSGB after the expiry of the new technical assistance agreement.”
MAS’ plan to review contracts with its suppliers as a means to turn it around last year has put LSGB’s 25-year catering agreement in the limelight.
Brahim’s executive chairman Datuk Ibrahim Ahmad Badawi did not directly comment when approached after the company’s annual general meeting recently, but had hinted at possible talks.
Brahim’s expects the stake acquisition to be completed in the third quarter of the year, subject to shareholders’ approval.