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Singapore Investment


 What's up with  KNM 7164 pn17 KNM GROUP BERHAD? Should you take a risky bet on the loss-making counter?

KNM Group Bhd made it to the top of Bursa Malaysia most active list on June 2.

The counter jumped 23.1% to close at 8 sen but still shy of its 52-week high of 15 sen.

In absence of fresh news, one could only speculate that the company may be announcing some positive developments soon.

One possibility is KNM could be a step closer to a potential listing of an indirect wholly-owned subsidiary, Borsig GmbH on main the board of the Singapore Stock Exchange.

In December last year, KNM obtained the green light from its board of directors on the listing of Borsig.

The exercise is part of KNM’s PN17 regularisation plan and it hopes to achieve a market capitalisation of up to USD300 million or its Singapore Dollar equivalent and placement of 49% of the enlarged capital comprising vendor and/or new shares.

Although there is no firm deal yet, the counter had surged some 60% on a year-to-date basis.

Prior to the announcement of the Borsig IPO, KNM had wanted to sell Borsig at a loss for RM1 billion but was aborted in December last year.

KNM had proposed Borsig’s disposal with €206.55 million to be used to pare down the group’s debt, including €12.93 million in repayment of the cash upstream loan receivables to Borsig.

The company probably feels the best way forward to rescue itself is to list Borsig.

This begs the question why the previous management was unable to list Borsig but the new management will be able to succeed?

After all the floatation exercise is going to be carried out by the same adviser.

KNM has appointed PrimePartners Corporate Finance Pte Ltd to act as the Issue Manager, Underwriter, and Placement Agent for the listing exercise.

PPCF is a boutique corporate finance firm headquartered in Singapore.

The only difference then and now is that the loss-making KNM has proposed to sell FBM Hudson Italiana SpA to British Midland FZE for 12 million euros (RM59.1 million).

The deal between KNM Europa BV and British Midland is dependent on satisfactory due diligence within three weeks, said KNM in a bourse filing on May 26.

FBM Hudson Italiana manufactures heat exchangers and high pressure equipment for the oil & gas industry.

KNM had earlier aborted its proposed flotation of FBM Hudson Italiana and FBM-KNM FZCO (collectively known as FBM Group) by way of an initial public offering on Catalist, the sponsor-supervised board of the Singapore Stock Exchange.

The proposal was called off as it was deemed not feasible to be carried through, said KNM.

The company added that given the financial state of FBM Group, which needs immediate restructuring and investment, and the current lack of resources at the holding company level, KNM, a disposal at the best price under the current circumstances would be the best solution.

The recent uptick in share price does give some hope that some good news are coming its way but it can be risky to bet your money on this counter given its fast changing development.


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