KUALA LUMPUR: KNM Group Bhd (KGB), which is currently embroiled in a boardroom tussle, fears that an abrupt takeover attempt will create a disruptive uneasiness amongst creditors, who have been very supportive of the company so far.
Chief executive officer and managing director Ravindrasingham Balasingham said this uneasiness might prompt significant actions from external creditors, such as the Asian Development Bank and TA/Danos.
Such actions could jeopardise the positive working relationship currently maintained by the board of directors and management, potentially leading to a setback in the company's progress thus far.
"We have kept the creditors informed and have assured them that the current chairman Tunku Datuk Yaacob Khyra is very serious about his controlling stake in KGB, and if necessary, he will not hesitate to increase his stake.
"We have an ad-interim restraining order (RO) court hearing coming up on September 20, 2023, and we are planning to obtain an extension by showing the court that we have been doing our utmost given the unique challenges of KGB and that we have the support of the majority of the creditors for the RO," he said in a statement today.
Moreover, he said that the possibility of replacing the present board of directors and management might influence the court's decision and cast doubt on the existing draft arrangement scheme, similar to past occurrences, which could result in another delay in the court's decision on the RO, postponing it until after the requested extraordinary general meeting.
KGB has a debt of RM1.167 billion owed to external creditors.
During a recent town hall meeting, a majority of RM1.024 billion from the total debt of RM1.167 billion creditors gathered, expressing their steadfast support in favour of extending the RO until December 2023.
Ravindrasingham noted that the current group had reorganised the company and established a robust professional framework for capitalising on different assets to meet the debt repayment goals.
He acknowledged that this task is challenging, given that the assets are scattered across international jurisdictions, and some of them are in suboptimal condition due to the KGB's financial struggles in recent years.
To recap, German billionaire Andreas Heeschen, on September 5, 2023, launched a hostile takeover bid of KGB, asking for an EGM to replace the existing board of directors with a new one, including himself and members of his party.
This action set off an unexpected takeover attempt and a subsequent battle within the boardroom.
KGB's current board of directors was established on November 8 2022, following the previous management's failure to implement the necessary monetisation of its assets effectively.
Ravindrasingham said Andreas to acquire KGB is no surprise because the company's shares are hugely undervalued.
"Even in terms of book value, its net tangible assets is 21 sen per share because KGB holds a stake in Borsig Group, the renowned company with an attractive market valuation over €300 million (RM1.5 billion)," he said.
KGB also controls FBM Hudson Italiana SpA (FBM Hudson) and FBM-KNM FZCO (FZCO), collectively as the FBM Group.
In May this year, KGB proposed to divest FBM Hudson to British Midland FZE for 12 million euros (RM59.1 million).
"FBM Hudson, too, will also be of immense value when turned around.
"Unfortunately, we lack the resources to fund such a turnaround under the current circumstances. As such, a disposal was necessitated at the best price given FBM Hudson Group's
current circumstances," he said.
Ravindrasingham said Andreas has had a keen interest in the Borsig Group and FBM Group and has made unsuccessful acquisition attempts, even as late as last year.
"He has in-depth knowledge of the value and potential of Borsig and FBM Hudson, which is not surprising as one of his suggested directors to replace the KGB board of directors is Flavio Porro, who was an executive director of KGB and the chief executive officer of FBM Hudson Group until December 2022, who also spearheaded and negotiated the failed attempts to sell the Borsig Group," he said.
Ravindrasingham said KGB still have some significant challenges ahead, and the boardroom tussle makes things even more complicated.
"But the situation we are in right now shows that our company has a bright future, mainly because our current board of directors is being questioned.
"Nevertheless, we ask everyone involved to do what's best for the company, protect what we've achieved so far, and ensure our business has a strong and secure future," he said.
