Editor’s Note: The following is a ’verbatim’ media statement by the aspirant directors of KNM Group Bhd who are attempting to unseat the current board of the loss making and cash-strapped oil & gas (O&G) engineering outfit at Monday’s (Oct 16) extraordinary general meeting (EGM).
The so-called takeover directors led by Johor princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar and German tycoon Andreas Heeschen had earlier today staged a ‘grand finale’ media conference to lay out plans by the seven nominated directors.
Apart from Tunku Kamariah and Heeschen himself, the other five members of the team are Datuk Abd Ghani Yusof, Datuk Zaidi Mat Isa @ Hashim, William H Van Vliet III (former KNM employee), Flavio Porro (former KNM executive director) and Edwin Silvester Das.
For the uninitiated, Tunku Kamariah – the elder sister of current Johor ruler Sultan Ibrahim Sultan Iskandar who us touted as the next Yang di-Pertuan Agong – has in recent months been an active player in the Malaysian corporate world.
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AS shareholders, we are concerned about protecting our own interests along with the 34,018 other KNM Group Bhd shareholders.
The plan of the current management as announced in the KNM Explanatory Statement (ES) to creditors dated Sept 26 and amended on Oct 2 details how the present board plan to dispose of assets and leave KNM shareholders with low or no value.
As shareholders, our humble opinion is that the existing plan will not meet the needs of all of KNM stakeholders or allow significant shareholder value in the future.
We are concerned for the KNM creditors who need to be a part of KNM’s future. This refers to debts owed by the company to suppliers and service providers who make up the supply chain of the company that collectively support jobs and businesses that contribute to the Malaysian economy.
The plan is to grow KNM and its assets in the future and we therefore need all stakeholders to benefit – not just the shareholders and creditors.
Contempt of court
The existing Explanatory Statement (ES) is misleading and inaccurate. After a year under the current management, KNM has been unable to prepare an acceptable scheme which would accomplish repayments of creditors as the Kuala Lumpur High Court had ruled in favour of appointing a professional liquidator at a hearing on Oct 11.
The purpose of this liquidator is not to liquidate the company but to professionally re-assess the existing scheme of arrangement (SOA) and the information contained in the ES. Notwithstanding the said court decision, a creditors’ meeting was held on yesterday (Oct 12) whereby creditors have been asked to vote.
We have obtained professional legal advice that this is in contempt of court as the court directed the meeting to be called off.
Existing debt restructuring plan
The sale of KNM’s wholly owned subsidiary FBM Hudson Italiana SpA is flawed in many ways. During the last 10 months, the company has lost all of its lenders’ support which provoked a fall in its value and rendering it into difficult situation.
That has reduced the potential described in the ES plan and brings little to no value to stakeholders. The issue is not likely to close due to numerous compliance issues concerning the Italian Golden Power approval process among other legal hurdles.
The sale or IPO (initial public offering) of Borsig Group is at a disadvantage because KNM loses control of its sole profit generator for the group. There can be better benefit to a future Borsig listing following which the new directors will look closely at such possibilities and opportunities by engaging professional advisors to review this option.
There is a lack of substance in the ES underpinning future proceeds from an IPO or pre-IPO with which creditors could be satisfied therefore maintaining equity value.
Selling its main assets as detailed in the ES is something that the current management specifically claimed to the media would not happen when they took over control of the company.
We are confident that we can deliver a bond to already identified European institutional investors to the tune of €110 mil (RM550 mil) using certain collateral of KNM’s assets and begin paying back creditors within 90 days of taking over the board.
This bond issue is subject to customary due diligence and information that we currently do not have access to.
Once this bond is placed and a much better understanding of the companies’ financials is obtained, a shareholder capital increase estimated to be up to RM600 mil will be placed. The purpose of this new money is to reset the balance sheet of the company and to provide the necessary capital to finance KNM’s operations at group level.
The company will enter into a five-year restructuring plan to turn around non-performing assets and create shareholder value. This includes investments into existing assets such as re-starting work in the Malaysian workshops and the ethanol plant in Thailand subject to due diligence.
The Borsig IPO can still be accomplished assuming that the conditions are favourable to the KNM shareholders.
We further intend to inject additional business into the group to support capacity of all operating subsidiaries. This includes investment into the Impress ethanol project in Thailand, to re-start the facility and potentially increase its size from 200,000 litres/day to 500,000 litres/day.
This asset like others in KNM only lacks appropriate capital and management to turn into performing assets.
In essence, we want to bring a new leadership into the company with experience in the industry and international markets. By so doing, we want to focus on protecting all stakeholders in the company.
Ultimately, we want to focus on building a future for KNM and its subsidiaries and not just to undertake a debt restructuring programme. – Oct 13, 2023