LOSS-MAKING KNM Group Bhd has secured a Japanese buyer for its German-based crown jewel Borsig GmbH for €270 million (RM1.245 billion), paving the way for it to deleverage its debt and restart its Malaysian operations.
The proposed deal, classified as a major disposal under listing requirements, would require the nod of at least 75% of its shareholders.
In an exchange filing today (Feb 27), KNM said its wholly-owned subsidiary, KNM Process Systems Sdn Bhd (KNMPS) has entered into a conditional sale, purchase and transfer agreement with Japan-based NGK Insulators Ltd for the proposed disposal of its 100% equity interest in Deutsche KNM GmbH, the parent of Borsig.
The move would end earlier attempts to float Borsig via an initial public offering (IPO).
“This is a fantastic deal, with pricing you cannot get with an IPO,” a person close to the deal told The Malaysian Reserve.
n October 2023, the debt-laden group saw an intense shareholder tussle for control. A group led by Johor princess Tunku Kamariah Aminah Maimunah lskandariah Sultan Iskandar and German billionaire Andreas Heeschen tried in vain to oust the entire existing KNM board led by its chairman Tunku Yaacob Khyra. Tunku Kamariah is the eldest sister of the present King of Malaysia.
Following the proposed disposal, KNM said it will concentrate its efforts on its core business in process equipment manufacturing, which currently operates through KNMPS.
The company said it plans to expand its operations in Malaysia, leveraging its established expertise in designing and manufacturing process equipment for the oil & gas (O&G), petrochemical, and fertilizer industries.
KNMPS operates two fabrication plants located in Gebeng, Pahang and Tanjong Minyak, Melaka, with a combined floor space of approximately 24,000 square metres. In 2023, its Malaysian operations contributed RM63.21 million in revenue to the group.
“We believe that focusing on our fabrication of processing equipment business will drive long term value for our stakeholders,” KNM group CEO Ravindrasingham Balasingham said in a statement.
The German incorporated DKNM, which wholly-owned Borsig and its subsidiaries, is principally engaged in the manufacturing of process equipment mainly used in the petrochemicals as well as O&G industries.
On its part, NGK is a global leader in ceramic technology, primarily engaged in the manufacture and sale of electrical insulators, advanced energy storage systems, industrial ceramic products, and electronic parts.
NGK’s product range includes ceramic catalyst carriers for exhaust gas purification, gas analysers, and heaters and electrostatic devices used in semiconductor manufacturing processes.
On the proposed deal, KNM said it is being undertaken to unlock the value of the DKNM Group, in order
to deleverage the debt position of KNM Group and to provide KNM Group with greater cash flow flexibility to regularise its condition moving forward.
As at Sept 30, 2024, KNM’s total borrowings was about RM1.27 billion with a gearing ratio of 3.94 times.
On Oct 31, 2022, KNM announced on Bursa Securities that it had been classified as a PN17 Issuer.–THE MALAYSIAN RESERVE
