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KNM (7164): KNM GROUP BHD plans IPO, SPAC listing to unlock assets

PETALING JAYA: Debt-laden KNM Group Bhd is planning several corporate exercises that would see the listing of its crown jewel Borsig GmbH in Germany, and injecting its subsidiaries in a special-purpose acquisition company (SPAC), in a bid to improve its financial position.

In a filing with Bursa Malaysia yesterday, KNM said it is currently in discussions with advisers on a proposed injection for a combination of cash consideration and a certain percentage of shares in the SPAC, which is to be determined after the SPAC completed its due diligence on the selected subsidiaries.

“The proceeds from the proposed injection will be used to repay KNM Group’s borrowings, working capital and other purposes to be determined by the board at a later date,” it said.

KNM expects to complete the exercise between six to nine months. There were no further details if the SPAC is an initial public offering (IPO) and if it will be listed on Bursa Malaysia.

KNM is also planning to list Borsig, a German process equipment manufacturer that it bought back in 2008 at RM1.7bil, at a “suitable stock exchange”.

It expects to complete the exercise within six to 12 months, and will also be looking at other avenues to monetise the assets of Borsig.

Aside from the IPO, KNM has also proposed to divest its equity interest and or assets in relation to the bio-ethanol plant in Thailand and energy plant in Peterborough, United Kingdom.

The proceeds from the sales will be used to “fully settle” the outstanding amount related to its Thai bonds and the group’s borrowings.

“The financial needs of KNM had arisen, in the first instance, due to the prolonged consequences of the Covid-19 pandemic, which had affected KNM and its traditional market far beyond initial assumptions in early 2020,and which subsequently played a domino effect on several businesses, investments and operations at group level,” KNM said.

It pointed out that the announced events of default, due to the non-payment of the outstanding principal and coupon payment on the bonds issued by KNM in Thailand is regarded as an isolated though material event.

KNM said it has formed a restructuring committee consisting of four board members to oversee the said corporate exercises.

“The proceeds from the corporate exercise will not only enable us to rectify the outstanding amount due under Thai bonds, but will also enable the management to focus on growing our businesses and unlock the sum-of-the-parts value of KNM group for its shareholders,” it said.


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