KUALA LUMPUR (Sept 5): A group of shareholders of KNM Group Bhd, led by new substantial shareholder German billionaire Andreas Heeschen, has initiated a hostile takeover in the loss-making and cash-strapped engineering group.
Heeschen, who emerged as a shareholder of the Practice Note 17 (PN17) outfit with a 7.91% stake or 320 million shares last week, together with seven other shareholders have sought the removal of all nine directors in the company.
KNM chairman Tunku Datuk Yaacob Khyra is also a substantial shareholder in the company, with a 9.44% indirect stake or 347.2 million shares held via Melewar Industrial Group Bhd.
Heeschen is the majority shareholder of German-based firearms manufacturer Heckler & Koch.
Heeschen, who together with the parties acting in concert hold a 10.69% stake, sought to appoint Johor princess Tunku Kamariah Aminah Maimunah lskandariah Binti Sultan Iskandar as a director to replace Yaacob.
Besides Yaacob, the group has proposed to remove the rest of KNM’s board ― namely directors Tan Sri Zulhasnan Rafique, Ravindrasingham Balasingham, Yee Hong Ho, Steve Ho Soo Woon, Thulasy Suppiah, Datuk Uwe Ahrens, James Beltran and Datuk Naresh Mohan.
Six new directors have been proposed to take over their posts, including Heeschen himself and Flavio Porro, a former executive director of KNM who exited the company back in December last year.
Also proposed to be appointed directors are: former chairman of Magna Prima Bhd and Komakcorp Bhd Datuk Abd Ghani Yusof; Edwin Silvester Das, who currently serves as Jiankun International Bhd CEO; Datuk Zaidi bin Mat Isa @ Hashim, who is also SMTrack Bhd executive director; and William H Van Vliet II, who is also CN Asia Corp Bhd executive director.
The shareholders want to hold an extraordinary general meeting (EGM) to be held to replace the directors.
Aside from Heeschen, the shareholders include Azmi Osman, Tai Tean Seng, Kok Seng Ping, Jacqueline Lee Fei Fei, Chang Hui Kee, Sazini Abdullah, AZM Trading Venture Sdn Bhd and Gan SMT Sdn Bhd.
At 5pm, shares in KNM closed unchanged at 10 sen, giving the group a market capitalisation of RM384.36 million. The counter has risen 100% this year from five sen per share, following a gradual increase first seen in June.
In a statement announcing the requisition, the shareholders pointed to KNM’s net tangible assets per share of 21 sen as at end-June.
KNM owns renowned German-based machinery and equipment manufacturer Borsig GmbH, but is facing liquidity issues as it was unable to sell the asset to pare its debt.
Burdened by its debt obligations and tight cash flow, KNM had previously embarked to part with Borsig for €220.8 million.
The deal failed to materialise, which led to KNM defaulting on three credit facilities totalling about RM416.8 million and subsequently triggering the Practice Note 17 (PN17) status.
It is worth noting that the Borsig deal fell through despite the longstop date for the share sale and purchase agreement for the disposal being extended various times.
Three weeks after the RM416.8 million default, the outfit announced it defaulted on the principal payment of US$3.4 million, with an outstanding interest of US$16,104, due to Bank of China (Malaysia) Bhd.
The group noted that the repayments would be dealt with or restructured under its proposed scheme of arrangement.
Since then, KNM has continued its dialogue with creditors and stressed its plan to accelerate the monetisation of non-core assets as well as Borsig.
As of end-June this year, KNM’s borrowings stood at RM1.18 billion, down from RM1.26 billion a year earlier. The group had been lossmaking for eight consecutive quarters. Negative reserves stood at RM1.21 billion, up from RM1.16 billion the year before.