Why has Faber to give up 60% of Sabah and

Sarawak concessions?
Monday, 16 March 2015

By: DANIEL KHOO

Health minister Datuk Seri Dr S. Subramaniam withnessing the MoU between Faber Mediserve
Sdn Bhd represented by its director Azmir Merican Amir Merican (front right) and health ministry
secretary-general Datuk Farida Mohd Ali (front left) on hospital support service concession in
Putrajaya. Also present are Group CEO UEM Group Datuk Izzaddin Idris (behind right) . MOHD
SAHAR MISNI/The Star

PETALING JAYA: Although integrated facilities management specialist Faber Group Bhds long
wait for a concession agreement to manage hospital support services in the northern states of
Peninsular Malaysia have been settled, questions are now being raised as to why the company
has to concede 60% of its stakes to other parties in the Sabah and Sarawak concessions.

Faber was recently awarded a concession to provide support services to government hospitals
in Perak, Penang, Kedah and Perlis for 10 years, but the investor community is wondering
whether the company has been shortchanged for the longer term since it has to give up stakes
in the Sabah and Sarawak concessions.
The issue seems to be that since Faber continues to drive the business in Sabah and Sarawak
despite the reduced stakes, would it be fair to the company as it would be only getting 40% of
the revenue?

While the companys managing director and chief executive officer Azmir Merican said the stake
reduction was not a new issue and was made known two years ago, industry observers noted
that the company would have invested quite a bit in assets and resources for the concessions in
Sabah and Sarawak.

Industry observers feel that the Sabah/Sarawak concessions need to be further examined since
like the concession to manage hospital services in the northern peninsula states these
concessions were also for a 10-year period.

With the exception of companies that have gone public, usually what an associate partner does
is to allow the bigger shareholders drive the business. In certain unique circumstances, due to
regulatory conditions and the like, the driver of the business may have to hold 50% minus one
share or limit its losses to 49% at the most, an analyst explained.

For instance, due to regulatory restrictions, companies such as DiGi.com Bhds biggest
shareholder Norway-based Telenor ASA owning an associate stake of 49% in the former, albeit
to a much closer 50% threshold than Fabers 40% stake.

Analysts also said they wanted to know what the other joint venture parties were bringing to the
table as Faber would have already invested a hefty sum throughout the years to acquire and
sustain these assets when the company wholly ownedthe concessions in both states.

Faber managing director and chief executive officer Azmir Merican told StarBiz in an email that
Faber would continue to drive the business.

Faber, though now a minority shareholder, has substantial experience in the industry and will
ensure that the business will continue to run smoothly, he said.

Azmir said the company was not able to release any financial information pertaining to these
contracts and how it would impact Faber but would do so once it had obtained clearance from
the Government via the Health Ministry.

The concessions in Sabah and Sarawak are owned via 40% stakes in Sedafiat Sdn Bhd and
One Medicare Sdn Bhd, respectively.

The balance stake is owned by companies based in both states. A further check with the
Companies Commission of Malaysia showed that Tan Sri Bustari Yusuf, a major shareholder of
Petra Energy, held a 36% stake in the Sarawak concession.

For the Sabah concession, Datuk Ag Buhtamam Ag Mahmun has a 24.9% stake in Sedafiat.
The other significant shareholder in Sedafiat is Sabahs Economic Development Corp with a
24% stake.