Key to its debt restructuring plan to exit its Practice Note 17 (PN17) status is getting the approvals to sell its German subsidiary, Deutsche KNM GmbH (DKNM), to Japan’s NGK Insulators Ltd for €270 million (RM1.33 billion).
The oil and gas services provider secured High Court approval earlier this month to sell DKNM. It is also seeking Bursa Malaysia’s nod to proceed with the disposal, but this is by no means a done deal.
KNM has confirmed it will hold an extraordinary general meeting on Oct 30 for shareholders to vote on the DKNM sale, as requested by its major shareholder MAA Group Bhd.
The group is led by KNM’s largest shareholder Tunku Yaacob Khyra, a member of the Negeri Sembilan royal family, who holds a 19.37% stake in KNM through MAA.
DKNM is the holding company of the group’s crown jewel, German machinery and equipment maker Borsig GmbH. DKNM is a wholly owned subsidiary of KNM Process Systems Sdn Bhd, which is a wholly owned subsidiary of KNM.
Major blow
KNM suffered a major setback when Bursa Malaysia rejected on Oct 3 its regularisation plan to exit its PN17 status, which was submitted in August.
Bursa stated the company was not able to prove it can grow and sustain its business, and that its plan does not fully fix the issues that caused its financial problems.
It said KNM’s proposal to sell DKNM would leave it mainly with operations in Malaysia that have been lossmaking since 2024.
The group was classified as a PN17 company in October 2022 after its auditors raised material uncertainties over its ability to continue as a going concern.
Following Bursa’s rejection, trading of KNM shares was suspended on Oct 13. The stock was also slated to be delisted by Nov 5 but KNM staved this off by appealing the decision on Oct 7.
As part of its appeal, KNM submitted a proposal seeking Bursa’s approval to proceed with the DKNM disposal.
The company highlighted the urgency of completing the transaction by Oct 30, 2025, as its success would immediately reduce the group’s RM1.3 billion debt and provide RM100 million in fresh funds to revitalise its operations.
Sign of confidence
A company source said Bursa should take cognizance that creditors will advance RM100 million in working capital from the sale proceeds, and agreed to a five-year zero coupon RM200 million deferred cash settlement scheme for the balance of their debt.
“This is a sign of confidence (in KNM’s plan), and the creditors have put their money where their mouth is,” he said.
He added the RM100 million cash for working capital will enable KNM to get bank guarantees needed to bid for new projects, and thus grow its business.
The source acknowledged the company’s lack of turnover had hindered it from getting bank guarantees in recent times.
“This will be resolved once we get the RM100 million cash on completion of the DKNM sale by November 2025,” he added.
In its appeal, the company sought Bursa’s approval for a six-month extension to submit another regularisation plan.
KNM is confident that armed with the RM100 million, it would be able to “show an order book to Bursa” in six months’ time, the source said.
The group is also hoping to dispose of its Italian unit FBM Hudson Italiana SpA, after three failed attempts. A binding offer worth €19.5 million (RM95.9 million) from Switzerland’s SymbEx GmbH and Germany’s Terragarda GmbH is under negotiation.
KNM filed for court approval of its debt-restructuring plan or scheme of arrangement on Sept 26, 2025, after most creditors approved it during a meeting in August. The court will hear the case on Oct 24.