SO, the takeover management is reluctant to unveil their five-year plan until they take over. Why are they unwilling to share the details at this very instance so that the shareholders of KNM Group Bhd can make an informed decision?
Isn’t it normal to analyse all the details before deciding on a prospect of an investment? To do otherwise will be foolish as we know that the devil is in the detail.
People’s livelihood are at stake, creditors have billions at stake, and our shareholders have already lost billions of ringgit.
Given the track record of the previous management (now the takeover management) that was in charge of KNM stock price fell to 3.5 sen in October 2022 (its historical low), it is imperative that they share the details of their five-year plan.
No more “pie in the sky” statements, please.
Also, let’s analyse what they have said – to raise bond or debt to settle debt. So, how much debt? At current juncture, one has to raise much more than RM1.2 bil to pay off the existing debt and make all the investments they are claiming to make.
This includes to build the Peterborough Green Energy Ltd plant in the UK and to re-start the Impress Ethanol Co Ltd (IEL) plant in Thailand that the previous management mothballed) as well as re-capitalise FBM Hudson Group which under the current deal negotiated (by the current management) is being funded by the buyer who has already invested €11 mil (RM55 mil) in the group.
Parring colossal debts
Be reminded that this eagerness for uncontrolled borrowing that has landed KNM in the current mess. The total debt of the KNM which stands at RM2.0 bil (including inter-company debts) at present time which the previous management created.
So if the takeover management team is going to borrow by issuing bonds and create an even larger debt burden on KNM than at present time, how are that going to be repay or serviced that debt (at current higher interest rate level) and given the risk premium involve to lending to KNM at present time?
Please note that at the same time as borrowing a larger amount of debt form new borrowers, the takeover management is going to ask the current creditors of KNM to take a haircut. Will any new creditor lend any money to such a circumstances?
The current KNM board can tell you that with the proposed Scheme of Arrangement (SOA) if approved by our creditors on Oct 12 (this Thursday), our quarterly losses will definitely be reduced by RM25 mil under our win-win solution with the support of our creditors. This cost savings will help us greatly in our efforts to get out of PN17.
This benefit will begin retrospectively from April 1, 2022. In return, we are proposing to pay our creditors 100% of their principal under our proposed SOA.
We see our creditors as our partners and treating them right when we are down will help us when we return to these Banks to borrow from them in the future.
Everyone knows that the current management is working hard to clear the mess created by those previous to us and with above also know that we will honour our debt commitments. Basically, we are establishing trust. We want to make KNM bankable in all sense of that word – again!
Moving forward we will ensure that our shareholders are not exposed by over-gearing the group which is the reason we are in this situation now.
Our Phase II work will involve integrating KNM and Borsig GmbH (KNM’s crown jewel) sp that we are able ensure a strong future for KNM with the appropriate level of IP (intellectual property) transfer and skill to ensure that we have stronger gross profit margins and stronger brand standards.
The current management appreciates that the primary corporate social responsibility of any corporation is to ensure that we create a sustainable future for our business so that our employees, creditors, shareholders and other stakeholders can have a dependable future.
That is exactly what the current management and board of directors of KNM has been working towards and will continue to do so with the support of all our stakeholders. – Oct 10, 2023
Ravindrasingham Balasingham is KNM Group Bhd’s CEO/executive director since Nov 8, 2022.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.