KUALA LUMPUR (Dec 20): Brahim's Holdings Bhd, which earlier this year said it was seeking a white knight to help the group get out of the practice note 17 (PN17) status, plans to sell a "substantial stake" in the group to frozen food manufacturing company MRI VC Bhd.
The group has inked a heads of agreement (HoA) with MRI VC, where the latter is considering taking up the stake in Brahim's and take part in a proposed rights issue, according to Brahim's executive chairman Datuk Seri Ibrahim Ahmad.
As part of the HoA, MRI VC has paid a RM2 million deposit for the Brahim's shares it is considering to take up.
"They (MRI VC) will not be the largest shareholder [if they decide to take up the stake]. I will continue to be the controlling shareholder," Ibrahim told a press conference when asked how big of a stake MRI VC was thinking of taking up in Brahim's, but declined to elaborate.
He also declined to go into specifics when asked about how much the group plans to raise from the proposed rights issue.
The HoA also stipulates that Brahim's will award monthly contracts with an aggregate value of up to RM500,000 each, over two years, to MRI VC, if the latter takes up the stake.
MRI VC executive chairman and founder Norizam Tukiman said the company is excited to ink the HoA. MRI VC is jointly owned by Norizam and his brother, Nor Halim Tukiman.
"The joining of our core competencies can help push the company (Brahim's) to greater heights to become one of the top profitable companies in Bursa Malaysia within five years," said Norizam.
Meanwhile, when asked when Brahim's will submit its plan to Bursa Malaysia to regularise its PN17 status, Ibrahim said the group aims to do so by Feb 27, 2020.
Brahim's chief financial officer Fadhli Rahman, meanwhile, said the group also has to show sustained profitability to exit PN17, adding he expects that to come about in the third quarter of next year, in the "best case scenario".
Under Bursa's listing requirements, for a company's PN17 status to be lifted, it has to register profits in two consecutive quarters following the submission of its regularisation plan.
When asked if the group could deliver two consecutive quarters of profits, Ibrahim said the group has the means to do so, given current developments, and aims to post a profit at the end of its financial year ending Dec 31.
The group posted a net profit of RM1.8 million in its third quarter ended Sept 30, 2019, compared with a net loss of RM4.03 million a year ago, as revenue grew 13.8% to RM80.5 million from RM70.73 million. In the cumulative nine-month period, it is still loss-making, with a net loss of RM1.61 million versus RM9.34 million a year ago.
The trading of Brahim's shares was suspended after morning trades today to make way for the announcement. It last settled at 32 sen, up 5.5 sen or 20.75%, which gave the group a market capitalisation of RM75.61 million. The stock will resume trading on Monday.