KUALA LUMPUR (Oct 14): MAA Group Bhd (KL:MAA) has urged the remaining shareholders of its 19.37%-owned KNM Group Bhd (KL:KNM) to support the proposed disposal of its German business unit Deutsche KNM GmbH (DKNM), warning that failure to do so could derail the group’s restructuring plan.

In particular, failure to meet the necessary conditions of the sale by Oct 30 would result in KNM no longer having its RM100 million working capital surplus previously negotiated with its scheme creditors, MAA said in a statement.

Cash-strapped KNM, a Practice Note 17 (PN17) company, is seeking to sell DKNM — the holding company for Borsig GmbH — to NGK Insulators Ltd for €270 million (RM1.34 billion) to pare its debt as part of its proposed regularisation plan.

KNM is appealing against Bursa Malaysia's decision to reject its PN17 regularisation plan, while MAA has called an extraordinary general meeting among KNM shareholders on Oct 30 to vote on the sale.

"The successful completion of DKNM disposal will enable KNM to settle total group debts of approximately RM1 billion, [and] secure RM100 million in working capital to revitalise its Malaysian operations," MAA said.

Failure to meet the Oct 30 deadline "will result in the Scheme Creditors stepping in to appoint a liquidator to complete the sale of DKNM and other assets".

On top of losing access to the working capital, KNM "would also lose access to proceeds from other asset disposals intended to support its future operations and recovery", it added.

"The proposed disposal and regularisation plan are integral to KNM’s recovery and future growth," it added.

Shares of KNM have been suspended from trading since Monday (Oct 13) after Bursa Malaysia rejected KNM's regularisation plan, saying the company was not able to prove it can sustain its business.

The DKNM sale would leave KNM mainly with operations in Malaysia that have been losing money since 2024 with an orderbook representing just 1.5% of its restructured share capital, it said.

Separately, KNM's group chief executive officer Ravindrasingham Balasingham told The Edge that within the requested six-month extension from Bursa to resubmit a new regularisation plan, the company aims to show a stronger orderbook with the additional liquidity.

Creditors have also agreed to a five-year, zero-coupon RM200 million deferred cash settlement scheme, he said.

At its Oct 12 close of 0.5 sen, KNM was valued at RM20.23 million.