KNM said its plan to monetise its assets will be accelerated under a disposal process based on a non-exclusive deal structure.
PETALING JAYA: Debt-laden manufacturer KNM Group Bhd
has reiterated that its creditors are working closely with the group’s board of directors to find a mutually acceptable resolution for the settlement of monies due to these respective lenders.
The group’s creditors include Credit Guarantee and Investment Facility (CGIF), Danos Ltd, TransAsia Private Capital Ltd (TA) and Bank of China (BoC).
The focus of the discussions is on the monetisation of KNM’s non-core assets and the initial public offering or sale of its wholly-owned German subsidiary and prized asset Borsig GmbH, as has been previously declared.
The company said in a bourse filing that its plan to monetise these assets will be accelerated under a disposal process based on a non-exclusive deal structure, which will also naturally lead to higher cash values on disposal.
This is the latest development in a long drawn cash-raising attempt by KNM, which first announced the idea for the disposing off of Borsig back in May last year.
KNM purchased Borsig back in 2008 through another subsidiary Deutsche KNM GmbH for RM1.65bil.
The proposed sale of Borsig, which has contributed a revenue of RM163.43mil or 66.2% to the group’s turnover for the quarter ended Sept 30, to Vorsprung Industries GmbH, unfortunately fell through in early December, leaving the company having to search for alternatives to resolve its debt issues.
Had the transaction gone through, it would have netted the company 220.8mil euros (RM1.03bil) and was expected to improve its gearing ratio by paring down its debt, though the group would be selling Borsig at a loss of RM490.55mil.
KNM then disclosed through further bourse filings that it had defaulted on loans totalling RM417mil, owed to Danos and TA and approximately RM15mil owed to BoC.
Following that, KNM even had to resort to the usage of the court’s restraining order to prevent its creditors from taking further actions to recover their dues.
Earlier in November 2021, the group had also missed principal and coupon payments on bonds issued in Thailand worth 2.78 billion baht (RM356.8mil), which were guaranteed by CGIF, a trust fund managed by the Asian Development Bank, which then had to pay the bondholders.
In turn, KNM had planned to refund CGIF with the proceeds from the proposed sale of Borsig.
Due to the failure of the disposal of Borsig, KNM had announced later on Dec 16, 2022 that it was attempting to list Borsig on the Main Board of the Singapore stock exchange, with a view of achieving a market capitalisation of up to US$300mil (RM1.3bil) and a placement of 49% of the enlarged capital comprising vendor or new shares.
Pursuant to that, KNM had also issued a private placement of 367.64 million new shares last month to raise approximately RM18.4mil, where RM14.9mil would be utilised as working capital requirements for ongoing business activities.
Another RM3mil would be used to cover estimated expenses related to the restructuring and formulation of the regularisation plan of the group.
For its third quarter ended Sept 30, 2022, KNM reported a net loss of RM68.97mil on a revenue of RM83.41mil.
It said it anticipates the outlook for the financial year ending June 30, 2023 to remain challenging due to the uncertainties in the global economic outlook.
