This article first appeared in The Edge Malaysia Weekly on April 18, 2022 - April 24, 2022

AS the sole in-flight caterer for then Malaysian Airline System Bhd (MAS), which is now known as Malaysia Airlines Bhd (MAB), Brahim’s Holdings Bhd was doing well until the national airline’s restructuring in August 2014.

Shares in Brahim’s reached their peak of RM2.64 in March 2014 — a period during which the group reported its last positive results, with a net profit of RM22.03 million for its financial year ended Dec 31, 2013. Since then, it has been bleeding red ink.

To top it off, the group — it used to serve around 35 international commercial airlines out of the Kuala Lumpur International Airport — was brought to its knees by the Covid-19 outbreak, resulting in accumulated losses of RM367.39 million as at end-2021.

Last Thursday, Brahim’s submitted an appeal to Bursa Securities against the commencement of delisting procedures on its securities. However, trading in its shares was suspended from last Friday, with the last traded price of a mere one sen, valuing the group at RM3.07 million.

When contacted by The Edge, executive chairman Datuk Seri Ibrahim Ahmad Badawi briefly says, “Nothing much to say at the moment. We’re appealing for an extension of time [to submit the regularisation plan].”

Brahim’s financials started to deteriorate in 2014 when MAS, which was already in the red, held back part of payments of monthly bills due to it. In the same year, MAS unveiled its recovery plan to revive its business operations, but it resulted in a dispute with Brahim’s over the billing issue. Brahim’s eventually inked a settlement agreement with MAS to release a portion of the withheld payments back to Brahim’s.

The deal was deemed bad for Brahim’s, which agreed to a 60% haircut on a disputed payment of RM94.03 million withheld by the airline, and a 25% reduction in its final monthly bills.

Under MAS’s recovery plan, all supply contracts were reviewed and reassessed and re-negotiated based on stringent benchmarks. As a result, the average selling prices of meals served to MAS were lower, in line with the airline’s efforts to reduce unit cost of food services.

The unfortunate events involving the missing MH370 flight and the downing of MH17 while flying over Ukraine airspace in 2014 added to its financial woes, Brahim’s had claimed, noting that the unfavourable business conditions had plunged the group into an unprecedented loss position. MAS was delisted in December that year.

There has not been much improvement over the past few years despite the group’s greater emphasis on the non-airline catering business targeting corporate customers such as Keretapi Tanah Melayu Bhd and Universiti Kebangsaan Malaysia.

Brahim’s had announced plans to secure non-aviation deals to supply meals to hospitals, hotels and other institutions. It is not known whether the group has managed to achieve the target of having 40% non-aviation revenue.

In February 2019, Brahim’s slipped into Practice Note 17 (PN 17) status because its shareholders’ equity fell below the 25% threshold (25% or less than the issued and paid-up capital). This came after its 2018 financial results were affected by impairment of goodwill totalling RM88.6 million on the back of lower air passenger volume from major customers as well as high operating costs.

There was an attempt by the group to secure a white knight, but it fell through after the heads of agreement with MRI VC Bhd, a frozen food manufacturing firm, was terminated in September 2020.

The state of its financials was worsened by the pandemic. There was a surge in net loss to RM103.1 million in 2020 from RM14.03 million in 2019. For FY2021, its net loss was RM12.49 million. As at end-December 2021, it had net debt of RM233 million with gross borrowings of RM238.2 million.

In November 2019, Brahim’s sold Dewina Host Sdn Bhd, a major restaurant and café operator at the Kuala Lumpur International Airport.

Brahim’s came into the limelight in late 2020, following the emergence of lifestyle food and beverage operator Focus Dynamics Group Bhd as its substantial shareholder. It was seen as an opportunity for Brahim’s to tap the non-aviation business, with the supply of meals to Focus Dynamics’ cloud kitchen. Nonetheless, the move does not seem to have paid off.

Focus Dynamics now holds a 16.08% stake in Brahim’s after purchasing two blocks of shares from the latter’s non-independent, non-executive director Tan Sri Mohd Ibrahim Mohd Zain and Brahim’s International Franchises Sdn Bhd, for a total of RM9.69 million.

Last July, Brahim’s raised RM11.34 million by placing out 70.89 million new shares at 16 sen each. Having subscribed for 17.72 million shares, or a 5.77% stake, Ibrahim’s shareholding in the group increased to 24.73%.

The group also operates warehousing and logistic business Tamadam Bonded Warehouse, which occupies a 15.13-acre lot in Port Klang. Contribution from this segment was relatively low, however, about 20% of the group’s top line in 2021.

The warehouse was valued at RM21.6 million in Brahim’s books as at end-2020.

Prior to the name change in June 2011, Brahim’s was known as Tamadam Bonded Warehouse Bhd, which was founded in 1982. It began as a provider of bonded warehousing, freight forwarding and transportation services.

In a reverse takeover, Tamadam had in March 2008 acquired a 51% stake in Brahim’s–LSG Sky Chefs Holdings Sdn Bhd, which held a concession with MAS for the provision of in-flight catering and related services. To reflect the new business direction, Tamadam subsequently received shareholders’ approval to change its name to Brahim’s.

Ibrahim — the brother of Malaysia’s fifth prime minister, Tun Abdullah Ahmad Badawi — has been at the helm of Brahim’s since May 2008. The 75-year-old was a lecturer and founding member of the faculty of food science and biotechnology at University Putra Malaysia. In 1986, he founded Dewina Food Industries, which was listed on the local bourse in 1995 before being privatised in 2002.

As the aviation industry is expected to continue to operate in challenging conditions despite the reopening of borders, the clock is ticking for Brahim’s to set its next business direction. Still, its status as a public-listed group hinges on the regulator’s decision on whether to give it more time to work on its revamp.

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