KNM could turn around if EGM vote goes to current management, says Borsig CEO

Thursday 16 May 2024

KUALA LUMPUR (Oct 11): In the on-going shareholder tussle over control of cash-strapped KNM Group Bhd, its current management has contended that the upcoming extraordinary general meeting on Monday (Oct 16) could mark a turning point for both KNM and its German-based wholly-owned subsidiary Borsig GmbH should shareholders vote to maintain the management and board, which are planning to list Borsig on the Singapore Exchange.

“The outcome of the upcoming EGM on Oct 16, where stakeholders will vote on the current management, could have a significant impact. A favourable result for the current management may not only enhance the value of Borsig through its IPO but also uplift the entire KNM Group,” Borsig chief executive officer (CEO) Jurgen Stegger said in a statement on Wednesday.

Stegger said that the listing of Borsig — slated in the second quarter of 2024 on the Singapore Exchange - was a strategic move by the current management of KNM to address the considerable financial losses incurred under the previous management.

"Borsig has been recognised as the most valuable asset within KNM. Currently, KNM is grappling with significant financial losses that have been accrued, compiled and consolidated by the previous management of KNM. The new management has inherited this challenging legacy.

"As a result, they have determined that selling Borsig, or a partial sale of Borsig, is the most viable course of action. The proceeds from this sale will be used to settle the creditors of KNM," said Stegger

The machinery and equipment company Borsig has been KNM’s core earnings generator, with a net profit of RM112 million to RM141 million per year over the past three years.

Listing Borsig on the Singapore Exchange will unlock the full potential of the company and offer it an opportunity to thrive in the market, and at the same time could aid KNM’s debt repayment efforts, he indicated.

KNM chairman Tunku Datuk Yaacob Khyra in a recent interview with The Edge said that Borsig's initial public offering (IPO) should raise about RM1 billion and clear KNM’s debts.

Stegger also expressed his deep trust for KNM's current management led by Yaacob. "His [Yaacob] steadfast leadership has earned stakeholders' trust and is warmly welcomed by financial partners and premium investors, making the journey towards IPO highly anticipated and promising," he said.

KNM's upcoming EGM was requisitioned by a group of shareholders collectively holding more than 10% of KNM's shares. Led by new substantial shareholder German billionaire Andreas Heeschen, they are proposing to oust the current board of the oil and gas engineering group and to replace Yaacob with Johor Princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar as chairman.

The group is also looking to remove the rest of KNM’s board comprising 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 individuals have been proposed as new directors, namely Heeschen, former KNM executive director Flaavio Porro, former chairman of Magna Prima Bhd and Komakcorp Bhd Datuk Abd Ghani Yusof, Jiankun International Bhd CEO Edwin Silvester Das, SMTrack Bhd executive director Datuk Zaidi Mat Isa @ Hashim and CN Asia Corp Bhd executive director William Van Vliet II.

"We aim to leverage the company’s existing assets and human capital to tap into emerging opportunities in renewable energies and engineering at unprecedented levels," the Heeschen-led group which does not favour the sale of Borsig, had previously said.

At noon close on Wednesday, shares in KNM were down one sen or 8.33% to 11 sen, valuing the group at RM460.94 million.

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