KUALA LUMPUR (Dec 7): KNM Group Bhd has defaulted on three credit facilities, two totalling US$23 million (RM101.4 million) and one of €68.5 million (RM316.2 million) on Dec 1, or about RM417.6 million in all.
In an exchange filing announcing the defaults by its wholly-owned subsidiaries, KNM said it is presently in close negotiation with the lenders, although the repayment date has not changed from the Nov 30 deadline, following a previous extension.
The Practice Note 17 (PN17) outfit said the events of default may trigger cross defaults in other existing financial facilities.
“Nevertheless, KNM Group has been communicating with the respective financial institutions involved pertaining to KNM Group’s plan to improve its financial position, in order for the KNM Group’s other existing financial facilities to remain status quo,” it added.
KNM had timed the repayment to be done upon its disposal of its key subsidiary Borsig GmbH for €220.8 million, which also had a Nov 30 deadline. However, the Borsig deal did not materialise, as the relevant conditions precedent were not fulfilled.
On the defaults, the euro-denominated credit facility was lent out by Danos Ltd to Peterborough Green Energy Ltd.
Meanwhile, the US dollar facilities from TransAsia Private Capital Ltd comprised two parts, namely US$13 million borrowed by KNM Renewable Energy Sdn Bhd, and US$10 million by Splendid Investments Ltd.
TransAsia lent out the funds in its capacity as manager, for and on behalf of the Asian Trade Finance Fund 2, a sub-fund of the TA Asian Multi-Finance Fund.
“KNM has been in close discussion with the lenders on various measures to address this event of default, and details of the measures are still in the state of flux,” it said.
It added that the event of default “may have an adverse impact” on the its financing facilities, in the event that KNM Group’s respective financial institutions suspend their financing facilities, pending the resolution of the event of default.
“In this respect, KNM would like to remind that the current businesses, in particular for overseas operations, and the actual general market conditions would be sufficient to ensure continuity, should the financial institutions maintain their respective positions.
“For this reason, KNM shall endeavour to continue its other business operations, notwithstanding this isolated event of default and will engage with the lenders and suppliers for their continued support,” it said.
KNM added that the subsidiaries involved — namely Peterborough Green Energy, KNM Renewable Energy and Splendid Investments — are not considered the group’s major subsidiaries.
Shares of KNM settled unchanged at five sen on Wednesday (Dec 7), valuing the group at RM168.59 million.