KNM Group Gains Shareholder Approval for €270 Million German Asset Sale
Practice Note 17 (PN17) company KNM Group Bhd announced that its shareholders have overwhelmingly approved the sale of its subsidiary, Deutsche KNM GmbH (DKNM), for €270 million (approximately RM1.3 billion) to Japan’s NGK Insulators Ltd.
This major corporate action was confirmed in a statement by the financially distressed engineering group, which reported that a significant 93.74% of its shareholders voted in favor of the disposal during its extraordinary general meeting (EGM) held yesterday.
The strong mandate from shareholders is expected to pave a critical path forward for KNM to execute the disposal of the DKNM Group.
This transaction is vital as it will dramatically strengthen the group’s severely strained balance sheet, primarily by significantly reducing its substantial debt obligations.
Crucially, the sale will also provide the necessary injection of working capital required to revitalize and restructure its core Malaysian operations.
In a move designed to demonstrate unwavering transparency, Ravindrasingham Balasingham, KNM Group’s chief executive officer, extended an invitation to the Minority Shareholders Watch Group (MSWG) to engage directly with minority shareholders who were present at the EGM.
This unprecedented level of engagement was intended to ensure all shareholder concerns were addressed openly, underscoring the management’s commitment to good governance during this challenging period for the group.
The successful sale is seen as the single most important step in the KNM’s comprehensive turnaround strategy.
Restoring Financial Health and Addressing Governance
The Minorities Shareholders Watch Group (MSWG) observed the entirety of the extraordinary general meeting and posed several questions to the board and management, all of which KNM Group stated were addressed comprehensively.
Ravindrasingham Balasingham highlighted that the disposal approval represents an essential step in restoring the financial health of the group and establishing a foundation for future sustainable growth.
He expressed sincere gratitude to the shareholders for their continued confidence and to all stakeholders who have supported KNM throughout this protracted financial journey.
KNM, which was once viewed as a market darling with ambitious global aspirations in oil-and-gas engineering, unfortunately slipped into the financially troubled PN17 status back in 2022.
This downfall followed several years marked by severe financial strain, escalating debt levels, and a worrying inconsistency in its reported earnings.
The core issue of the sale of DKNM is directly linked to KNM Group’s ability to raise funds to resolve its financial issues.
Following the recent withdrawal of its appeal against its delisting from the stock exchange, the group’s securities are officially scheduled to be removed from the Official List on November 5.
This imminent delisting adds urgency to the completion of the DKNM sale, which is the cornerstone of its plan to demonstrate viability, settle outstanding obligations, and potentially return to a healthier financial footing in the future, even if it means operating as a private entity for a time, as KNM works toward a full recovery.
Navigating Delisting Amidst Critical Strategic Sale
The imminent delisting of KNM Group from Bursa Malaysia adds a layer of complexity and finality to the DKNM disposal process.
While the shareholder vote secured a massive mandate for the sale, the company is concurrently navigating the final stages of being removed from the Official List, following the withdrawal of its appeal against the Bursa Malaysia directive.
This context means the successful execution and closure of the €270 million sale to NGK Insulators is now more critical than ever, as it represents the group’s last major opportunity to inject substantial capital and rectify its financial position before its public status changes.
The proceeds, earmarked for debt reduction and working capital, are essential for the survival and restructuring of the remaining Malaysian operations.
Without this capital, the turnaround plan would be severely jeopardized.
The transparent engagement with MSWG and minority shareholders before the sale reflects the management’s awareness of its fiduciary duties, even as it prepares for delisting.
The sale is fundamentally a survival tactic for KNM Group, allowing it to settle liabilities and focus on rebuilding a sustainable business model with a clean slate.
The massive shareholder approval, despite the looming delisting, underscores the belief that the DKNM sale offers the best and most pragmatic path for the future viability of the KNM business, separating a strong asset to save the core group.
