For Immediate Release

Brahim’s Holdings Berhad gearing up to exit PN17

Kuala Lumpur, 5 March 2019, — Brahim’s Holdings Bhd (BHB) targets to recover and gear up to exit from PN17.  The company wishes to assure all its shareholders, customers, suppliers, joint venture partner and employees that its business at operations level is not affected by this status.

The company will enter into strategic discussions with partners to review capital and business structure with the view of complying with the listing requirements as soon as practicable.  The company will also push key initiatives to drive operational improvement and productivity enhancements following a board and management review to rejuvenate its consolidated financials. In the near term outlook, it should be positive given improved costs management and productivity. This is in addition to increased business volumes recorded for the aviation catering business. 

BHB will seek consultations with prospective Principal Advisers to formulate and submit a regularisation within the next 3 months and will make necessary announcements in due course.

Brahim’s is in the right business.  Halal is one of the most promising and potentially high value industry.  A report had valued the global halal food and beverage market at USD 1.37 trillion in 2014, which represented 18% of the entire market, and the number of Muslims worldwide is expected to increase from 1.6 billion in 2010 to 2.8 billion in 2050, according to Pew Research Center. 

The appeal of halal has extended beyond religious rules being accepted even by non-Muslims.  The halal business is growing fast and the halal food industry is burgeoning. It is more evident in the past decade and Brahim’s is one of the major player in this sector, having its own Halal Excellence Centre which has certified 13 Halal Flight Kitchen globally.

“With the support of our government and Malaysians in general, Brahim’s hope to achieve its aim of being a major global Halal company, insya Allah,” said Chairman Dato’ Seri Ibrahim.

“With the above measures, we hope to project a much better achievement by the end of this fiscal year and it is important to take note that other subsidiaries and private companies helmed by the Executive Chairman are not affected by this situation,” said the company.

“Certainly, we are saddened by the events that had unfolded over the years, and the resultant NCA for the MAS Recovery Plan where we were forced to write off RM74 million in receivables from MAS, accepting very thin margins for meals served and flights handled and non-compensated shortened contract terms,” added Dato’ Seri Ibrahim.

“Nevertheless, it is important that we get the Group back to “investment grade” – and paying dividends. We are a business of scale and complexity and we have the resources to do a lot more. It will be our relentless focus on meeting customers’ and markets’ needs that will help us to achieve our goals for the long-term success of the Company for the benefit of all our stakeholders.”

Chronology of Events

In 2003, Brahim’s and MAS signed a 25 years Catering Agreement. Brahim’s paid RM170 million in cash for a 70% equity in MAS Catering with accumulated losses of RM240 million, negative shareholders fund and bleeding at about RM40 million per year in its operations.   The 25 years concession was needed to ensure Brahim’s had sufficient time to recover its investment, which is not unlike any other bailout projects, certainly not a gifted ‘monopoly’.  This exercise by the government was primarily to have MAS re-focus itself as a carrier rather than being in other non-core business.  In the same year, Brahim’s entered into a joint venture with LSG Sky Chef and renamed to LSG Sky Chef Brahim’s Sdn Bhd (LSGB) with a new shareholding structure of Brahim’s 36%, LSG Sky Chef 34% and MAS 30%.

During the transformation period from 2004 to 2011, LSGB saw a 50% improvement in terms of productivity and efficiency and has become the premier provider of halal kitchen facilities and inflight catering services.

In 2012, the inherited accumulated losses burden of RM240 million under MAS Catering was eventually wiped out after 10 years of hard work by the management and staff of LSGB.  By then LSGB has served up to 36 airlines with a total output of about 50,000 meals per day and is the world’s biggest halal flight kitchen and garnered multi-winning awards for quality and excellence.

During the Malaysianisation Program in 2013, Brahim’s took over LSG Sky Chef stake and renamed to Brahim’s Airline Catering Sdn Bhd with a new shareholding structure of Brahim’s 70%, and MAS 30%.  The company recorded a profit after tax of RM57 million – the highest profit since it took over from MAS.  Share price was at RM2.40 per share.

Following the MAS tragedies in 2014, Khazanah in 2015, developed the MAS Recovery Plan to rebuild the country’s national carrier, which among others reviewing all supply contracts.   As a result of this massive cost-cutting Recovery Plan, Brahim’s signed a New Catering Agreement on 16 September 2015 with up to 40% price cut in monthly bills.  Brahim’s had to accept very thin margins for meals served and flights handled.  In that contract, the company was forced to write off RM74 million in receivables from MAS, and reduce the remaining contract term from 14 years to 5+5 years without any compensation, which affected their shareholders fund.  In 2014 saw a first time loss of RM35 million and the share price plunged to below 50 sen from a high of RM2.40 of the previous year.

In 2016, the company went into a joint venture with SATS (Singapore) with a new shareholding structure of Brahims 36%, SATS Singapore 34% and MAS 30%, and renamed to Brahim’s SATS Food Services Sdn Bhd.

On February 28, 2019, BHB was classified as Practice Note 17 (PN17) status, after its shareholder equity fell below the 25% threshold.  Its shareholders fund stands at negative RM5.816 million for year ending 2018 as compared to positive RM98.812 million for 2017.  This decline is attributable to impairment on goodwill of RM88.6 million.

-End-

Kuala Lumpur – Tamadam Bonded Warehouse Berhad (“Tamadam”), a leading Malaysian logistics and warehousing services provider, today announced that it has entered into a memorandum of understanding with the vendors of Brahim’s-LSG Sky Chefs Holdings Sdn Bhd (“BLH”) and Dewina Hosts Sdn Bhd (“DH”) on the proposed acquisition of 51% of BLH and 51% of DH.

The proposed acquisition of 51% of BHL and 51% of DH will be at an indicative purchase consideration of RM130 million and RM6.12 million respectively, to be satisfied entirely with Tamadam shares. The proposed acquisition will be formalized via the execution of a share sale agreement upon the finalisation of all terms of the proposed acquisition.

“In coming up with this proposed acquisition, we see value in the businesses of the assets to be acquired and I know our shareholders will appreciate the expansion in earnings from the current business model.” Cheam Heng Cheang, Managing Director of Tamadam.

He goes on to say, “We see great growth potential in the food service and catering industries, and through BLH and DH and their involvement in these industries, we will be able to enhance value for Tamadam’s shareholders.”

The balance 49% of BLH is owned by LSG Asia GmbH which is a wholly owned subsidiary of LSG Lufthansa Service Holding AG, the world’s largest provider of catering and in-flight solutions which operates under the “LSG Sky Chefs” brand. This acquisition is expected to contribute positively to the future earnings of the Tamadam Group upon completion.

BLH owns 70% of LSG Sky Chefs-Brahim’s Sdn Bhd (“LSGB”). The balance 30% of LSBG is owned by Malaysian Airline System Berhad (“MAS”). LSGB was formerly known as MAS Catering Sdn Bhd.

LSGB is a global airline catering company serving 29 international airlines. Operating 24 hours daily with an output of 40,000 meals per day, the company is the premier provider of in-flight catering and cabin handling services at both Kuala Lumpur International Airport and Penang Airport.

BLH prides itself on the preparation of 100% guaranteed halal meals and a fully integrated food logistics supply chain which includes coldrooms, warehouses and distribution support. Some of their major clients include MAS, Japan Airlines, Cathay Pacific, Korean Air, Air Asia and Thai Airways.

DH is involved in the food catering business and operates eleven restaurants and cafes in KLIA and the LCCT including Burger King, Asian Kitchen, Cafe Marche and Suria Cafe.

Tamadam, a public listed company on the Second Board of Bursa Malaysia, is an investment holding company with subsidiaries involved in the provision of warehousing and logistics solutions.  Some of the services offered include warehousing (bonded and non-bonded), cold storage, trucking, distribution, customs forwarding, freight forwarding and container storage and repair.

Kuala Lumpur – Tamadam Bonded Warehouse Berhad (“Tamadam”), a leading Malaysian logistics and warehousing services provider, today signed a conditional Sale and Purchase Agreement with Brahim’s International Franchises Sdn Bhd (“BIF”) to acquire a 51% equity interest in Brahim’s-LSG Sky Chefs Holdings Sdn Bhd (“BLH”) at an indicative purchase consideration of RM130.0 million, to be satisfied by the issuance of new Tamadam shares.

Upon completion of the acquisition of BLH, the vendor, namely BIF, is expected to hold approximately 73% of Tamadam. The shareholders of BIF are Datuk Ibrahim bin Haji Ahmad and Tan Sri Dato’ Mohd Ibrahim bin Mohd Zain.

Tamadam also entered into another conditional Sale and Purchase Agreement with Dewina Holdings Sdn Bhd (“DHSB”) to acquire 51% equity interest in Dewina Host Sdn Bhd (“DHost”) consisting of 127,500 shares in DHost at a purchase consideration of RM6.12 million also to be satisfied by the issuance of new Tamadam shares.

Upon completion of the acquisition of DHost, the vendor, namely DHSB is expected to hold approximately 3% of Tamadam. The shareholder of DHSB is Datuk Ibrahim bin Haji Ahmad.

“The injection of these two companies into the Tamadam Group is expected to add value to our bottom line, whilst satisfying our long term goal of being a more diversified group. These acquisitions are expected to contribute positively to the future earnings of the Tamadam Group upon completion.” said Cheam Heng Cheang, Managing Director of Tamadam.

The balance 49% of BLH is owned by LSG Asia GmbH (“LSG Asia“) which is a wholly owned subsidiary of LSG Lufthansa Service Holding AG, the world’s largest provider of catering and in-flight solutions which operates under the “LSG Sky Chefs” brand. LSGB has entered into a technical assistance agreement with LSG Asia on 25 September 2003 and basically entails the provision of various technical assistance by LSG Asia for the operations of LSGB for a period of twenty-five (25) years until 2028.

BLH owns 70% of LSG Sky Chefs-Brahim’s Sdn Bhd (“LSGB“). The balance 30% of LSGB is owned by Malaysian Airline System Berhad (“MAS“). LSGB was formerly known as MAS Catering Sdn Bhd. LSGB has a catering agreement with MAS which was entered into on 25 September 2003 giving LSGB the exclusive right to supply and provide in-flight catering and cabin handling services to MAS at both the KLIA and Penang airport for a period of twenty-five (25) years until 2028.

LSGB is a global airline catering company serving more than thirty (30) international airlines. Operating 24 hours daily with an output of 40,000 meals per day, the company is the premier provider of in-flight catering and cabin handling services at both Kuala Lumpur International Airport and Penang Airport.

LSGB prides itself on the preparation of 100% guaranteed halal meals and a fully integrated food logistics supply chain which includes coldrooms, warehouses and distribution support. Some of their major clients include MAS, Japan Airlines, Cathay Pacific, Korean Air, Air Asia and Thai Airways.

DHost is involved in the food catering business and operates a total of eleven (11) restaurants and cafes located at the KLIA and the LCCT including Burger King, Asian Kitchen, Cafe Marche and Suria Cafe. The balance 49% of DHost is owned by Host International, Inc. (“Host International“), a wholly owned subsidiary of Host Marriott Services Corporation, with its headquarters in Bethesda, Maryland, United States of America.  Host International manages restaurants, gift shops and related facilities at seventy-one airports and nine off-airport locations, on tollroads (including ninety-two travel plazas) and shopping malls.

Tamadam, a public listed company on the Second Board of Bursa Malaysia, is an investment holding company with subsidiaries involved in the provision of warehousing and logistics solutions.  Some of the services offered include warehousing (bonded and non-bonded), cold storage, trucking, distribution, customs forwarding, freight forwarding and container storage and repair.

On 8 June 2006, a signing ceremony was held between Amanah Raya Berhad (“ARB”) and Tamadam Bonded Warehouse Berhad (“Tamadam”). A Sale and Purchase Agreement was entered into whereby Tamadam sold a property known as “Tamadam 1” to Amanah Raya Berhad for RM27.9 million. Tamadam then entered into an agreement to lease back Tamadam 1 from Amanah Raya Berhad for a period of ten years renewable for a further five years. For further details of the transaction please see our announcement.

ARB is Malaysia ‘s premier trustee company. Since its establishment as the Department of Public Trustee and Official Administrator on 1 May 1921, ARB has served the nation for over eighty years and is the market leader in providing trust, deceased estate administration and will services. ARB is wholly owned by the Government of Malaysia with its shares held by the Minister of Finance (Incorporated). Currently, ARB has twenty branches nationwide with its headquarters situated at Wisma AmanahRaya Berhad, 2 Jalan Ampang , 50450 Kuala Lumpur . For more information on ARB please visit ARB’s website.

Tamadam Bonded Warehouse Berhad is one of Malaysia’s premier logistics companies. It provides total logistics, warehouses, forwarding and transportation services. It is listed on the Second Board of Bursa Malaysia . For more information on Tamadam Bonded Warehouse Berhad please visit our website.

L-R : YM Tunku Dato’ Seri Mahmud b Tunku Besar Burhanuddin (Chairman, TBWB),
Mr Barry Ooi (AGM, TBWB)

Standing (L-R) : Mr Goh Joon Hai (Director, TBWB), Ms Tan Mui Teck (Associate, Kamarudin & Partners), Dato’ Haji Dusuki b Haji Ahmad (Chairman, Amanah Raya Bhd), Tengku Mohamed Fauzi Hamid (Partner, Tengku Mohamed & Alan Lim)

Seated (L-R) : Mr Cheam Heng Cheang (Managing Director, TBWB), YM Tunku Dato’ Seri Mahmud b Tunku Besar Burhanuddin (Chairman, TBWB), YB Dato’ Ahmad Rodzi Pawanteh (Managing Director, Amanah Raya Bhd), En Zainul Abidin (Company Secretary, Amanah Raya Bhd)

L-R : Tuan Haji Kamal bin Abdullah Al-Yafii (Director, Amahah Raya Berhad), Dato’ Haji Dusuki b Haji Ahmad (Chairman, Amanah Raya Bhd)

L-R : YM Tunku Dato’ Seri Mahmud bin Tunku Besar Burhanuddin (Chairman, TBWB), YB Dato’ Ahmad Rodzi Pawanteh (Managing Director, Amanah Raya Bhd), Dato’ Haji Dusuki b Haji Ahmad (Chairman, Amanah Raya Bhd)

 
L-R : Ms Wong Thiang Heng (Corporate Affairs Manager, TBWB), Ms Goh Tse Mein (Property Executive, Amanah Raya Bhd)

L-R : Mr Frankie Cheang (Senior Marketing Manager, TBWB), Mr Khor Chin Joo (AGM – Finance, TBWB), Mr Barry Ooi (AGM, TBWB), Ms Cathy Leong (Senior Marketing Manager, TBWB)

L-R : Mr Steven Fung (Partner, Kamarudin & Partners), Mr Cheam Heng Cheang (Managing Director, TBWB), Ms Wong Thiang Heng (Corporate Affairs Manager, TBWB)

L-R : En Abas Abd Jalil (Manager, Property Investment, Amanah Raya Bhd), YB Dato’ Ahmad Rodzi Pawanteh (Managing Director, Amanah Raya Bhd), En Mohamed Azahari Kamil (Managing Director, Amanah Raya-JMF)

L-R : En Mohamed Azahari Kamil (Managing Director, Amanah Raya-JMF), Mr Cheam Heng Cheang (Managing Director, TBWB)