PETALING JAYA: KNM Group Bhd
has secured a deal to sell its crown jewel, German-based process equipment maker Borsig GmbH, to Japan’s NGK Insulators Ltd for 270mil (RM1.25bil) higher than the 220.8mil (RM1.03bil) valuation it fetched in 2022.
KNM said in a filing with Bursa Malaysia that its wholly owned subsidiary KNM Process Systems Sdn Bhd (KNMPS) had entered into a conditional sale, purchase and transfer agreement with NGK to dispose of its 100% equity interest in Deutsche KNM GmbH (DKNM), the investment holding company for Borsig.
This is part of KNM’s efforts to regularise its financial position as a Practice Note 17 company and pare down its RM1.27bil debt. The sale proceeds would be used to settle borrowings, reducing its total debt to RM69.42mil and improving its gearing ratio from 3.94 times to 0.22 times.
KNM chairman Tunku Datuk Yaacob Khyra described the disposal as a strategic decision that aligned with the company’s restructuring plan.
“By reducing our debt burden, we are positioning ourselves for future expansion and strategic investments,” he said in a statement.
The DKNM Group contributed 80.82% and 83.08% of KNM Group’s revenue for the financial year ended Dec 31, 2023 (FY23) and the nine-month financial period ended Sept 30, 2024 (9M24), respectively.
KNM said that while listing Borsig was preferred, the deal with NGK offered a valuation comparable to an initial public offering while providing immediate liquidity.
Following the disposal, KNM will focus on growing its Malaysian operations through KNMPS, which designs and manufactures process equipment for the oil and gas, petrochemical, and fertiliser industries.
The company’s fabrication plants in Gebeng, Pahang, and Tanjong Minyak, Melaka, have a combined floor space of 24,000 sq m. Prior to the onset of the Covid-19 pandemic, KNM’s Malaysian operations generated a turnover of RM263mil and earnings of RM19mil.
KNM group chief executive officer Ravindrasingham Balasingham said focusing on its fabrication of processing equipment business would drive long-term value for its stakeholders.
KNM’s stock was suspended from trading yesterday, and will resume today. The counter last traded at 5.5 sen per share, giving it a market capitalisation of about RM223mil.
