German billionaire-led group of shareholders seeks to remove KNM directors
A bunch of investors in KNM Group Bhd, headed by the recently acquired significant shareholder German billionaire Andreas Heeschen, has launched an unwelcome and aggressive acquisition attempt in the engineering conglomerate that is currently experiencing financial losses and has limited funds.
Last week, Heeschen became the second-largest shareholder of the PN17 company, owning 7.91% or 320 million shares. Along with seven other shareholders, they have requested the dismissal of all nine directors in the company.
Tunku Datuk Yaacob Khyra, the head of KNM, holds the most significant ownership in the company. He has an indirect interest in the company through Melewar Industrial Group Bhd, which amounts to 9.44% or 347.2 million shares.
Heeschen holds the largest share of ownership in Heckler & Koch, a firearms producer located in Germany.
Heeschen, along with the parties collaborating, have a total ownership of 10.69% and aimed to select Johor princess Tunku Kamariah Aminah Maimunah lskandariah Binti Sultan Iskandar as a director in place of Yaacob.
In addition to Yaacob, the team has suggested the removal of the remaining members of KNM's board, including directors 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 fresh directors have been suggested to assume their positions, which comprises Heeschen himself and Flavio Porro, a previous director of KNM who departed the organization in December of the past year.
Furthermore, there are suggestions to appoint the following individuals as directors: Datuk Abd Ghani Yusof, who held previous positions as chairman of Magna Prima Bhd and Komakcorp Bhd; Edwin Silvester Das, currently fulfilling the role of CEO at Jiankun International Bhd; Datuk Zaidi bin Mat Isa @ Hashim, who also serves as an executive director at SMTrack Bhd; and William H Van Vliet II, who holds the position of executive director at CN Asia Corp Bhd.
The shareholders desire to convene an exceptional general assembly (EGA) with the purpose of replacing the directors.
In addition to Heeschen, the stakeholders encompass Azmi Osman, Tai Tean Seng, Kok Seng Ping, Jacqueline Lee Fei Fei, Chang Hui Kee, Sazini Abdullah, AZM Trading Venture Sdn Bhd, and Gan SMT Sdn Bhd.
Shares in KNM remained steady at 10 sen when the market closed at 5pm. This has led to the group having a market capitalisation of RM384.36 million. Throughout the year, the stock has experienced an impressive 100% increase from five sen per share, starting with a gradual rise in June.
The shareholders stated in a declaration that KNM's tangible assets per share of 21 sen as of June's conclusion.
Promising Hope Lacked Impact
KNM is the proud owner of well-known German machinery and equipment manufacturer, Borsig GmbH. However, they are currently experiencing financial difficulties due to their inability to sell this valuable asset in order to reduce their debt.
Struggling with its debt responsibilities and limited funds, KNM had previously made the decision to sell Borsig for a sum of €220.8 million.
The agreement did not happen as planned, causing KNM to be unable to fulfill its obligations on three credit facilities worth approximately RM416.8 million. As a result, KNM entered into Practice Note 17 (PN17) status.
It should be pointed out that the Borsig deal did not materialize, even though the deadline for the agreement to sell and purchase shares in the company was extended multiple times.
Three weeks after failing to pay off a debt of RM416.8 million, the company declared that it also failed to repay the main sum of US$3.4 million, along with an unpaid interest of US$16,104 owed to Bank of China (Malaysia) Bhd.
The team acknowledged that the payments would be addressed or reorganized as part of its proposed plan of action.
Since that time, KNM has maintained its communication with creditors and emphasized its strategy to expedite the conversion of non-essential assets, including Borsig.
As of the end of June this year, KNM's debts amounted to RM1.18 billion, which was lower compared to RM1.26 billion in the previous year. The company has been experiencing losses for eight quarters in a row. The negative retained earnings reached RM1.21 billion, an increase from RM1.16 billion in the prior year.