“The last time I checked, Borsig GmbH is a German company. Its primary market is in Germany, but it’s going to be listed in Singapore. What does Singapore investors have to do with a German company?” he asked.
The incumbent board led by Tunku Yaacob Khyra, the largest shareholder with 9.5% direct interest, is looking for a pre-initial public offering (IPO) by end-2023 and IPO by the second half of 2024 for the German machinery and equipment company.
It hopes to raise RM900 million from the IPO proceeds to pare down its existing debt of some RM1.1 billion, holding a remaining stake of 40% after the floatation.
Heeschen, who holds 8.25% direct interest in KNM, suggested there are inherent risks in opting for an IPO.
“IPOs are extremely fickle processes, there are many people (involved), there’s a lot of commitment of time, there are many professionals that cost a lot of money, to do something like that,” he said at a press conference called by the shareholders seeking the board’s removal at an extraordinary general meeting (EGM) next Monday.
“Therefore, what you need is certainty of outlook and planning, to support something like that (an IPO),” he added.
Former KNM executive director Flavio Porro, who is on Heeschen’s line-up of new directors, questioned the slow progress of the IPO for Borsig.
“It is already 10 months since the first announcement of the IPO. Where are we with the corporate exercise?,” he asked.
“We are at pre-IPO stage and basically there’s (still) no private placement. When analysed professionally, I don’t believe the (financial) numbers are sustainable,” added Porro.
RM550 million bond
In a statement issued by Heeschen and shareholders seeking the board’s removal, the group proposed to issue a €110 million (RM550 million) bond to European institutional investors.
“We will use certain collateral of KNM’s assets and begin paying back creditors within 90 days of taking over the board.”
After the bond is issued, they said a shareholder capital increase estimated at up to RM600 million will be placed.
“The purpose of this new money is to reset the company’s balance sheet and provide the necessary capital to finance KNM’s operations at group level,” they said, adding a five-year restructuring plan will be put in place.
“This includes investments into existing assets such as restarting work in the Malaysian workshops and the ethanol plant in Thailand subject to due diligence.”
The statement said the Borsig IPO “can still be accomplished”, assuming the conditions are favourable to the KNM shareholders.
“The company has some RM1.1 billion of debt that needs to be restructured, so a bond of RM550 million is a good start. The company needs equity, it needs new money from investors,” Heeschen said.
There’s a clear risk the company’s equity value will be wiped out if the debt holders take over, he said.
“I don’t want to see that happen. That’s why I’m here, I’m protecting my investment. I’m not doing a hostile takeover.
“Therefore, I’m using my time, and my contacts in the investment world to bring fresh money into the company,” he added.
Meanwhile, the question of which group will prevail will be answered on Monday as the 30,000-plus shareholders cast their votes at the EGM.
Johor Princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar, the elder sister of the Sultan of Johor, is slated become the group’s chairperson if Heeschen’s team gets enough support to vote out the current board and bring in their line-up of new directors.
A recent statement by the group said Andreas, a friend of Tunku Kamariah, was invited to invest in Malaysia with the hope of restructuring KNM from its financial struggle while bringing in foreign direct investment (FDI) and create new jobs.