THE present management of cash-strapped KNM Group Bhd has committed a contempt of court by not only ‘converting’ its court-convened meeting into an informal meeting to seek the views of creditors with regard to its proposed Scheme of Arrangement (SOA) but also by conducting a vote on its proposed debt restructuring plan among its creditors.
Such move, according to Flavio Porro who is a team member of the German tycoon Andreas Heeschen-led takeover directors, is as a direct violation of the Kuala Lumpur High Court’s order on Oct 11 to postpone indefinitely the scheduled creditors’ meeting by the oil & gas (O&G) engineering outfit slated for the following day (Oct 12).
“That the current KNM directors have failed to comply with the judge’s order is likely an act of contempt of court. Orders are not issued by courts for parties to manipulate at their leisure,” Flavio who was previously an executive director of KNM pointed out.
“The primary purpose in seeking a contempt finding is to vindicate the integrity of its (court) own authority. Contempt proceedings have the primary purpose of upholding the dignity and authority of the court.”
Interestingly, the Italian national and former CEO Terence Tan Koon Ping have been sued by KNM along with its indirect wholly owned subsidiaries Deutsche KNM GMBH and Borsig GMBH after the O&G group called off the disposal of Borsig to Vorsprung Industries GMBH for €220.8 mil (RM1.107 bil) in December 2022.
In a Bursa Malaysia filing on Thursday (Oct 12), KNM said the plaintiffs filed the writ action against the duo who were former executive directors (EDs) of the group at the Kuala Lumpur High Court on Wednesday (Oct 11).
Echoing the sentiment raised by Porro is Johor princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar reckoned that the action of the present management is intended “to influence shareholders in the upcoming EGM that they have majority creditors support”.
“However, one might question what support exist when you don’t even have a valid scheme. Creditors should question the sincerity of the current board,” opined Tunku Kamariah who has been nominated as the new KNM chairman should the takeover directors are successful in removing the current board led by chairman Tunku Yaacob Khyra in tomorrow’s (Oct 16) fully virtual voting in conjunction with the group’s extraordinary general meeting (EGM).
In their latest media statement, the takeover directors have further expressed dismay over the recent actions by the Tunku Yaacob-led board for attempting to assert dominance over legal proceedings which eventually stirred controversy.
“Among the issues raised by the creditors is the board’s alleged failure to give its SOA scheme creditors a14-day notice period as stipulated by the court order,” noted the aspirant directors.
“Furthermore, claims regarding the Borsig listing on the SGX (Singapore Stock Exchange) have been challenged with the only known approval being at the board level which many argue is insufficient for such a significant transaction.”
Elsewhere, the takeover directors also claimed that sale of the FBM Hudson Group and the inter-company debts have also been brought into question, with discrepancies in the reported figures causing concern among stakeholders.
On Friday (Oct 16), Tunku Kamariah – the elder sister of Johor ruler Sultan Ibrahim Sultm Iskandar who is the potential Yang di-Pertuan Agong come January – along with Heeschen have proposed a new direction for KNM.
Heeschen who is known for his business acumen said he will introduce a €110 mil (RM550 mil) bond backed by European institutional investors to re-vitalise KNM (one of the two planned financial instruments available to the new group).
The German is currently a substantial shareholder of KNM with 8.25% direct stake or 333.6 million shares (in comparison Tunku Yaacob holds a 9.5% indirect stake or 384.2 million shares via MAA Group Bhd).
His team which includes notable figures such as Porro, Tunku Kamariah, Datuk Abd. Ghani Yusof, Datuk Zaidi Mat Isa @ Hashim, William H Van Vliet III and Edwin Silvester Das lave also outlined a five-year plan to rejuvenate the company’s assets and operations.
In expressing reservations about the current board’s asset disposal strategy, the aspirant directors have also emphasised the need to prioritise the interests of the 34,018 KNM shareholders.
KNM closed 0.5 sen or 4.17% lower at the close of Friday’s (Oct 16) trading with 66.73 million shares traded, thus valuing the company at RM465 mil. – Oct 15, 2023