KNM opts for delisting to pave way for German unit sale
In a surprising about-turn, KNM Group Bhd has decided to give up its listing status to facilitate the disposal of its German subsidiary Deutsche KNM GmbH (DKNM) for 270 million euros (RM1.32 billion), which is critical to its turnaround.
The Practice Note 17 (PN17) status oil and gas services provider withdrew its appeal against delisting yesterday, stating its shares will be delisted on Nov 5.
In its bourse filing yesterday, it said the withdrawal was necessary as the timeframe of regulatory processes involved in pursuing the appeal could potentially affect the completion of the DKNM sale.
KNM described the delisting as “a strategic move” to accelerate its turnaround and complete the disposal of DKNM to Japan’s NGK Insulators Ltd, which gave the highest and most credible offer.
It added that delisting allows it to move faster, execute projects more effectively, and focus on restoring profitability without any delays.
“KNM has endured some of its toughest years and is now on the verge of transformation. If delisting is what it takes to complete the NGK sale, eliminate debt, and restore growth – it is a necessary step forward,” KNM group CEO Ravindrasingham Balasingham said in a statement.
The company said the successful completion of DKNM’s sale and purchase agreement (SPA) is critical to the ongoing efforts to stabilise its financial position.
“Failure to complete the SPA would derail the entire restructuring plan, leading to an inevitable liquidation, which would result in minimal to zero recovery for shareholders and impaired recovery for creditors,” it added.
The disposal is expected to boost KNM’s dire financial position by paring down its RM1.3 billion debt and providing RM100 million in working capital to revitalise its Malaysian operations.
On Oct 3, Bursa Malaysia Securities rejected KNM’s proposed regularisation plan to exit its PN17 status, stating the company had failed to show it could sustain its business.
As a consequence, trading of its shares was suspended on Oct 13, and it was slated to be delisted by Nov 5. However, KNM staved this off by appealing Bursa’s decision on Oct 7.
The company said the current trading price of its shares already reflects “minimal value”, making the impact of delisting largely symbolic.
Its share price was half a sen at the time of its suspension, valuing the company at just RM20 million.
The group stressed delisting does not mean the end of the company as KNM will continue operating as an unlisted public company, with shareholder rights protected under the Companies Act 2016.
The next major step for the group is the extraordinary general meeting called by its largest shareholder MAA Group Bhd on Oct 30.
MAA is pushing for shareholders to approve the proposal to sell KNM’s crown jewel – DKNM’s subsidiary Borsig GmbH – to NGK to resolve its financial problems.
