Type Announcement
Subject OTHERS
Description BRAHIM’S HOLDINGS BERHAD (“BRAHIM’S” OR “THE COMPANY”)
SECOND EXTENSION AGREEMENT ENTERED INTO BETWEEN BRAHIM’S AIRLINE CATERING SDN BHD (A 70%-OWNED SUBSIDIARY OF BRAHIM’S) AND MALAYSIAN AIRLINE SYSTEM BERHAD
1. INTRODUCTION
Further to the Company’s announcement dated 7 May 2015, the Board of Directors of the Company wishes to announce that the Company’s 70%-owned subsidiary, Brahim’s Airline Catering Sdn Bhd (“BAC”) has entered into a second Extension Agreement (“2nd EA”) dated 8 May 2015 with Malaysian Airline System Berhad (“MAS”) (“the Parties”) to facilitate documentations of a New Catering Agreement (“NCA”) to be executed between Malaysia Airlines Berhad [MAB] and BAC.
The Parties have agreed to extend the NCA Cut-Off date from 30 April 2015 to 10 May 2015 (“2nd Extended Date” or “NCA Cut-Off date”).
The Parties agreed in good faith to use all reasonable best efforts to conclude and sign, on or before the 2nd Extended Date also referred as NCA Cut-Off date, an NCA that is benchmarked against international standards and is based on industry best practices between MAB and BAC.
2. SALIENT TERMS OF THE 2ND EA
(a) Purpose of the 2nd EA
The Parties had earlier entered into:-
1. A Settlement Agreement dated 26 February 2015 (“SA”) to provide for the settlement of certain disputes and the negotiations of a NCA; and
2. An Extension Agreement dated 31 March 2015 to extend the NCA Cut-Off date from 31 March 2015 to 30 April 2015.
The purpose of the 2nd EA is to give time to finalise the documentations of the NCA between the Parties’ legal counsels.
The Parties hereby agree that the NCA Cut-Off Date under the SA shall now be extended from 30 April 2015 to 10 May 2015.
(b) The salient term of the 2nd EA is as follows:
1. The Parties hereby agree that the NCA shall be entered into on or before the NCA Cut Off Date between MAB and BAC.
2. BAC acknoweledges and agrees that as of the date of this 2nd EA, the following terms of the NCA are acceptable to it and unless otherwise requested by MAB in writing, undertakes to cause them to be incorporated in the NCA and not to re-negotiate such terms in connection with the finalisation of the NCA (“Agreed Terms”):
a) The scope of services;
b) The pricing of the services to be rendered by BAC under the New Agreement and the pricing of the services to be rendered by BAC to MAS under the Catering Agreement during the Transitional Period;
c) The flight numbers in respect of which the New Agreement relates (the Nominated Flights)
d) The term of the New Agreement and the conditions of renewal of the term of the New Agreement;
e) The service levels;
f) The events triggering a termination of the New Agreement, and;
g) The terms relating to the application, and form, of the performance bond from BAC to guarantee the performance of its obligations under the New Agreement.
3. Without prejudice to Clause 2 above, the Agreed Terms represent certain key commercial matters agreed between BAC and MAB in respect of the terms and conditions relating to the provision of Services by BAC to MAB and are not intended to be exhaustive.
3. RATIONALE OF THE 2ND EA
The 2nd EA is to give more time for the Parties’ legal counsels to finalise and conclude the NCA with a common goal to expedite the signing. The negotiations conducted thus far has enabled the Parties to agree on the material terms and move closer towards an NCA that is benchmarked against international standards and based on industry best practices to be signed between MAB and BAC.
4. EFFECT OF THE 2ND EA
The 2nd EA is not expected to immediately have material effects on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of Brahim’s for the financial year ending 31 December 2015.
5. INTEREST OF MAJOR SHAREHOLDERS AND DIRECTORS
None of the directors and/or major shareholders of Brahim’s and/or persons connected to them have any interest, direct or indirect, in the 2nd EA.
6. DIRECTOR’S STATEMENT
The Board of Directors of Brahim’s, having considered the rationale and terms of the 2nd EA is of the opinion that the execution of the 2nd EA is in the best interest of the Company.
7. DOCUMENTS FOR INSPECTION
In view of the confidentiality clause on certain terms in the Agreement, the Agreement would not be made available for inspection.
This announcement is dated 8 May 2015.