Entry into KNM 'not to acquire Borsig for cheap', long-term plan in the works

TheEdge Mon, Sep 18, 2023 06:28pm - 2 weeks View Original

KUALA LUMPUR (Sept 18): The group of shareholders making a bid to take control of KNM Group Bhd does not intend to acquire Borsig GmbH for cheap, but plans to introduce a five-year strategy to address both the company’s growth and debt repayment.

This is “in stark contrast to the current management’s short-sighted focus on asset-stripping,” said Flavio Porro, a former executive director of KNM who may rejoin the group's board as part of the new board of directors proposed by the shareholders led by German businessman Andreas Heeschen.

In a statement, Porro said the proposed board intends to establish a regularisation plan which aims to align the group’s restructuring plan with its long-term strategic goals to enable the company to leverage its competitive advantages.

The immediate focus is “ensuring continuity in company operations”, Porro added.

Addressing an earlier plan to dispose of Borsig — proposed at a time when Porro was KNM executive director — he said “the sale might have been the right decision at the time” but the new proposed board aims to “re-evaluate this approach” and other decisions to maximise shareholder value.

“We aim to open new markets and lines of business, focusing on renewable energy and engineering,” he added.

“We believe that with the right leadership and strategy, KNM can once again become a leading player in the industry.

“The company needs decisive, effective solutions, not half-measures or compromises. We are committed to implementing swift and effective strategies that will not only restore the balance sheet but also enhance transparency, reactivity, and sustainability for the long term,” he said.

Porro’s words were in response to KNM chief executive officer and managing director Ravindrasingham Balasingham claiming that the shareholders are attempting to take control of the group as a cheaper way to acquire Borsig and FBM Group.

Heeschen on Sept 1 filed a notice with a group of shareholders seeking to remove all existing KNM directors, including its chairman Tunku Datuk Yaacob Khyra, who holds an indirect 9.44% stake in the group.

Among the replacements proposed were Tunku Kamariah Aminah Maimunah lskandariah Sultan Iskandar, the eldest sister of the Sultan of Johor, and Porro.

Weighed down by debt and liquidity issues, KNM, now a Practice Note 17 company, is undertaking an asset monetisation exercise. It previously attempted to dispose of Borsig at a discount for €220.8 million (RM1.1 billion), but the deal did not materialise.

KNM must submit a regularisation plan to regulators by end-October. The extraordinary general meeting (EGM) to deliberate on the proposed board changes will be held on Oct 16.

Shares in KNM ended half a sen or 4.55% lower at 10.5 sen, giving the group a market capitalisation of RM424.82 million.

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