Herfy addresses shareholder's allegations, rumors

Herfy Food Services Co. issued a statement for shareholders in response to recent allegations and rumors circulating about the company.

They included claims made by shareholder Ahmed Al-Saeed, who alleged financial misrepresentation and asserted his commitment to the best interests of the company and its shareholders. Al-Saeed's statements called into question the performance of the current executive management. 

In a statement to Tadawul, Herfy asserted that the claims made by the petitioner are unfounded, considering the efforts the current management has undertaken to develop the company, implement best practices, and maintain its interests while ensuring its financial and administrative stability.

It is inconsistent for the petitioner to assert his concern for the company's welfare and profitability in light of the information and facts that contradict his claims, the company added.

Al-Saeed submitted in Q1 2021 a copy of an agreement signed by him requesting a special bonus of SAR 20 million, a personal waiver of the DOKA trademark and its branches, and a personal waiver of the buildings of the Al Sudair factory project, according to the company.

The agreement further included appointing Al-Saeed as a technical consultant to the company under a five-year contract with an annual bonus of SAR 3 million, payable at the beginning of each year, Herfy said.

Additionally, he requested the appointment of his son, Khalid, as CEO and Managing Director of Herfy for a three-year term starting May 1, 2021, renewable for a similar period.

The company pointed out that these requests would have incurred significant costs for his personal benefit.

Herfy went on to say that Al-Saeed and his son did not relinquish their positions within the company upon their departure, which resulted in the failure to deliver documents and records, including title deeds for the properties and land owned by the company.

It added that a factory established by the aforementioned individual, who was the Chairman at the time, supplied a product (mayonnaise) bearing Herfy's trademark to restaurants not affiliated with Herfy outside Riyadh on June 2, 2023. A report was filed with the Ministry of Commerce, and the case was referred to the Public Prosecution, leading to charges and referral to the competent court.

Al-Saeed filed a lawsuit in 2022 against the company, claiming end-of-service benefits and vacation balances for 40 years, totaling SAR 44.9 million. He lost the case, and a ruling was issued on March 23, 2022, dismissing his claims. It is important to note that the financial statements did not reflect provisions for the claimed amount during his management tenure.

Al-Saeed also appointed 14 relatives in the company, according to the company.

On March 24, 2021, a month before his resignation, Al-Saeed increased the rental value of three properties he owned in Abha and Riyadh from SAR 250,000 to SAR 950,000 annually, leased to Herfy. However, the lease had three years before its expiry. He also increased the rental value of one of his properties in Riyadh for the company from SAR 200,000 to SAR 350,000 annually. In addition, Al-Saeed amended the rental value of a property he owned in the industrial area of Riyadh for the company from SAR 180,000 to SAR 290,000 annually without any change in the lease term or area. The petitioner signed this amendment solely with his son Khaled without referring to the board or any of its committees. The board and the general assembly rejected these actions and reflected them in the annual report for 2021.

Al-Saeed took advantage of an investment opportunity that the company aimed to pursue. On December 15, 2020, the board approved to acquire an existing brand in the restaurant sector, such as the Kudu restaurant chain. After submitting his resignation, he presented a purchase offer for the mentioned brand, resulting in a lost investment opportunity for the company. Currently, social media is circulating that the aforementioned person has an interest in Kudo Company.

On March 14, 2021, the petitioner directed company employees to terminate the lease of a property that was used as a commissary for Herfy. The company's management was surprised by this on June 22, 2021 when it realized that it had been re-leased to a competing company owned by the aforementioned person’s first-degree relatives who were working at Herfy during that period.

On April 8, 2021, Al-Saeed transferred an amount of SAR 43.4 million from the company's account to his personal account and returned it on April 28, 2021.

On April 29, 2021, he transferred SAR 37.6 million to his personal account from the company's account and returned it on May 6, 2021.

In 2021, Al-Saeed transferred two vehicles from the company to his own ownership without approvals and any explanation to the company.

Herfy affirmed that it had no intention of engaging in these disputes. However, given the circulating statements and speculations on social media regarding the company, it became necessary to clarify the facts.

The company also highlighted its commitment to taking the necessary actions to move forward and to pursue what is in the best interest of both the company and its shareholders.

To view the statement, click here: