KNM Group Disposes Of Entire Stake In DKNM To Japan's NGK For RM1.24 Bln

KUALA LUMPUR, Feb 27 (Bernama) -- KNM Group Bhd, through wholly-owned subsidiary KNM Process Systems Sdn Bhd (KNMPS), has entered into a conditional sale, purchase and transfer agreement with Japan-based NGK Insulators Ltd for the proposed disposal of its entire equity interest in Deutsche KNM GmbH (DKNM) for 270 million euros (about RM1.24 billion).

DKNM is a wholly-owned indirect subsidiary of KNM incorporated in Germany. Through its subsidiaries, namely wholly-owned Borsig GmbH and its subsidiaries, DKNM is principally engaged in the manufacture of process equipment mainly used in the petrochemicals as well as oil and gas industries.

In a filing with Bursa Malaysia, KNM said the proposed disposal is being undertaken to unlock the value of the DKNM group in order to deleverage the debt position of KNM Group and to provide the group with greater cash flow flexibility to regularise its condition moving forward. 

bootstrap slideshow

As of Sept 30, 2024, KNM Group’s total borrowings was approximately RM1.27 billion, with a gearing ratio of 3.94 times.

"The group has earmarked RM1.20 billion of the proceeds raised from the proposed disposal for the repayment to its creditors and to pare down its existing borrowings, whose debt was incurred for project financing, capital investment and working capital,” it said.

In a separate statement, KNM said the disposal marks a strategic move by KNM as part of its broader regularisation plan to address its classification as a Practice Note 17 (PN17) issuer under Bursa Malaysia’s listing requirements.

bootstrap slideshow

The proceeds from the proposed disposal, on a proforma basis, are expected to significantly reduce the Group’s total borrowings to approximately RM15.05 million, improving the gearing ratio to an estimated 0.04 times, it noted.

“Following the disposal, the group will concentrate its efforts on its core business in process equipment manufacturing, which currently operates through KNM Process Systems Sdn Bhd.

“The company plans to expand its operations in Malaysia, leveraging its established expertise in designing and manufacturing process equipment for the oil and gas, petrochemical, and fertilizer industries,” said the group.

Meanwhile, group chief executive officer Ravindrasingham Balasingham believed that focusing on the group fabrication of processing equipment business will drive long-term value for stakeholders.

“KNM has a very strong track record in this sector, and with the right financial support in place, we can pursue opportunities both in Malaysia and regionally more aggressively, as we already have a strong standing in the industry,” he said.

-- BERNAMA