KNM Group Questions Takeover as Potential Means to Acquire Valuable Assets

KNM Group Bhd is raising concerns regarding the recent takeover attempt by German billionaire Andreas Heeschen, suggesting it might be a cost-effective strategy to acquire the group’s prized assets, Borsig Group and FBM Group, which hold a significantly higher value than KNM itself.

Heading: Shares Deemed Undervalued

CEO and Managing Director Ravindrasingham Balasingham expressed that the attempted takeover was not surprising given that KNM’s shares are substantially undervalued. KNM’s net tangible asset (NTA) is 21 sen per share, primarily because of its ownership of the prestigious machinery and equipment company, Germany-based Borsig Group, valued at over €300 million (RM1.5 billion).

Heading: Contrasting Market Capitalization

In contrast, KNM’s current market capitalization stands at RM465 million, considerably lower than the combined market value of the two subsidiaries.

Heading: Heeschen’s Previous Interest and Knowledge

Ravindrasingham noted that Heeschen had shown a strong interest in Borsig Group and FBM Group in the past, with unsuccessful acquisition attempts as recent as last year. Heeschen’s intimate knowledge of the value and potential of these entities is further evident by his suggestion to appoint Flavio Porro, the former KNM executive director and CEO of FBM Group, as one of the directors to replace KNM’s board.

Heading: KNM’s Restructuring Efforts and Debt Resolution

Ravindrasingham emphasized that KNM’s current position is primarily a result of liquidity issues and high debt levels, which the current management is diligently addressing. The ongoing asset monetization exercise is expected to alleviate these financial challenges.

Heading: Potential Negative Impact of Takeover Attempt

An abrupt takeover attempt could create distress among supportive creditors, potentially jeopardizing the positive working relationship between KNM’s current board and external creditors, including the Asian Development Bank and TA/Danos. KNM’s management is committed to defending the interests of all stakeholders, including a possible legal course of action if required.

Heading: Legal Proceedings and Restraining Order Hearing

KNM is actively considering its legal options and will be participating in an upcoming ad-interim restraining order (RO) court hearing on September 20. The company aims to obtain an extension by demonstrating its diligent efforts and majority creditor support for the RO.

Heading: KNM’s Share Value

At 4:41 pm, KNM’s shares remained unchanged at 12 sen, reflecting a total group valuation of RM465.28 million.