KUALA LUMPUR (Sept 8): KNM Group Bhd is to now dispose of its loss-making indirect wholly owned subsidiary FBM Hudson Italiana SpA for €22 million cash (RM110.09 million) to United Arab Emirates-based Petro MAT FZCO.
A €12 million (RM60.05 million) deal for the oil and gas (O&G) equipment maker unit was previously announced between KNM and British Midland FZE, but according to a bourse filing on Friday, British Midland has appointed Petro MAT to replace it as the buyer in the transaction.
KNM did not disclose the reason behind the change in buyer in the filing.
The cash-strapped engineering group said its indirect wholly owned subsidiary KNM Europa BV has entered into a conditional share purchase agreement with Petro MAT to dispose of 100% equity interest in FBM Hudson Italiana for €22 million in four tranches.
The higher price tag of €22 million was achieved upon further negotiation on a “willing-buyer willing-seller basis”, according to KNM.
“In view of the continued loss-making operations of KNM Europa and uncertainty in business prospects, KNM has decided to exit this loss-making segment and the expected proceeds to be received from the proposed disposal of FBM Hudson Italiana, albeit in tranches, can be reallocated to other viable businesses and for the working [capital] requirements within the group,” it added.
The group said it expects a loss of €18.7 million or RM95 million to arise from the disposal but did not elaborate further.
Subject to shareholders’ and other relevant approvals, the disposal is expected to be completed on Oct 31, 2023, or another date mutually agreed between KNM and Petro MAT.
KNM has appointed M&A Securities Sdn Bhd to be its advisor for the disposal.
FBM Group, comprising KNM units FBM Hudson Italiana and FBM-KNM FZCO, posted a loss after tax (LAT) of RM12.57 million for the financial year ended June 30, 2023 (FY2023), compared to RM12.07 million in the 18-month period ended June 30, 2022, and a profit after tax of RM1.77 million in FY2020.
Last year, Practice Note 17 outfit KNM had mulled to float FBM Group on the Catalist Board of the Singapore Stock Exchange via an initial public offering.
The proposed listing was called off after KNM deemed the move unfeasible, citing FBM Group’s financial state and need for immediate restructuring and investment.
Shares in KNM ended half a sen or 4.35% higher at 12 sen on Friday, giving the group a market capitalisation of RM485.51 million.