PETALING JAYA: The gloves are effectively and actually off in KNM Group Bhd’s brewing takeover battle as chairman Tunku Yaacob Khyra has thrown down the gauntlet to German billionaire Andreas Heeschen, who’s allegedly in search of to snap up its prized asset, Borsig Group, on a budget.
Tunku Yaacob, the financially distressed oil and fuel supplier’s largest shareholder, shouldn’t be backing down whilst predators circle the prey.
The truth is, he’s assured of prevailing on this company battle initiated by Heeschen and events performing in live performance who issued a requisition discover for a rare common assembly (EGM) to take away him and present board members, and substitute them with their very own workforce.
“Carry on the EGM! That’s Tunku Yaacob’s (rallying cry),” mentioned KNM CEO and managing director Ravindrasingham Balasingham in an unique interview with FMT Enterprise.
Tunku Yaacob, through the Melewar Industrial Group Bhd, has an oblique stake of 9.44% or 347.2 million shares. Heeschen, a considerable shareholder of German firearms maker Heckler & Koch, emerged as a considerable shareholder of KNM after buying a 7.91% stake or 320 million shares on the finish of final month.
Ravindrasingham mentioned his chairman is “not nervous” about Heeschen’s bid and is ready to speculate extra if he has to in an effort to shield his curiosity in KNM.
“Don’t forget that Tunku Yaacob has spent some huge cash increase his stake. When you’ve spent a lot cash to stroll in, are you prepared to simply stroll out?
“Possibly we’d like an EGM, to ship a message to everybody that ‘I’ve management and I’m not going to relinquish it to anyone’,” mentioned Ravindrasingham, who was appointed to his roles final November 2022.
Intriguingly, it additionally seems to be shaping up as a royalty versus royalty battle as Heeschen and his companions have nominated Johor princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar to exchange Tunku Yaacob, who’s a member of the Negeri Sembilan royal household.
A ‘improbable funding’
Ravindrasingham mentioned KNM, regardless of bearing the stigma of being a Apply Word 17 (PN17) firm, is a “improbable funding, and stands to offer improbable returns”.
“In fact, Heeschen is coming in at a lower cost whereas Tunku Yaacob (had invested) at a better worth. However even at that worth, the chairman feels that Borsig Group was a improbable purchase,” he added.
Borsig, a famend German equipment and tools firm, has a pretty market valuation in extra of €300 million (RM1.5 billion). The group had acquired a 100% fairness curiosity in Borsig in 2008 for €350 million.
In distinction, KNM’s market capitalisation of about RM445 million is significantly decrease than Borsig’s worth.
On Sept 8, Ravindrasingham claimed Heeschen’s takeover bid was a “cheaper method” to amass the group’s crown jewels – Borsig Group and FBM Group. He mentioned the transfer got here as no shock as a result of its shares are “massively undervalued”.
Elaborating on this, he revealed Heeschen has twice sought to amass Borsig, the final try being in early 2022 which “by no means acquired concluded”. This takeover bid can be Heeschen’s third try to snag Borsig, albeit through a special method.
“Any businessman want to purchase one thing low cost, however the truth he has tried thrice tells you one thing essential about Borsig,” he added.
Shareholders to find out board’s destiny
When quizzed if he was assured shareholders would help the KNM board on the upcoming EGM, Ravindrasingham mentioned it was as much as the shareholders to determine.
“One group (Heeschen) is coming in, eyeing the primary asset, the jewel (Borsig),” he mentioned, including that it was in distinction to the board’s aggressive monetisation course of to pare down its exterior money owed amounting to about RM1.17 billion.
In accordance with Ravindrasingham, the KNM board is choosing an preliminary public providing (IPO) for Borsig on the Singapore Change (SGX).
“Borsig is an IPO mannequin and never a disposal,” he careworn.
“We’ll get full market worth for Borsig, with adequate money to pare down the debt and nonetheless (preserve) an fairness presence to learn from it sooner or later.
“The full stake we plan to supply on the pre-IPO and IPO train can be within the 60% area, so the remaining stake can be 40%,” he mentioned.
He added when the corporate’s financials flip round, there’s nothing stopping KNM from buying extra of Borsig and taking a much bigger position sooner or later.
Ravindrasingham estimates that KNM will generate proceeds of about RM900 million from the Borsig IPO.
“Borsig alone can slice off a big chunk of the debt. With the latest sale of Italy-based FBM Hudson Group for €22 million (RM110 million), near a billion ringgit can be lined by the 2,” he mentioned.
The present administration is searching for a pre-IPO by end-2023 and an IPO by the second half of 2024 on the SGX.
PrimePartners Company Finance Pte Ltd in Singapore has been appointed as the difficulty supervisor, underwriter, and placement agent for the upcoming IPO.
Extra property within the secure
In the meantime, KNM has different property that it may possibly monetise. This consists of its cassava-to-ethanol plant Impress Ethanol Co, Ltd in Bangkok, Thailand and its deliberate energy-from-waste facility in Peterborough, UK beneath Peterborough Inexperienced Power Ltd which has 54 acres of land and all of the licenses vital proper as much as grid connection.
“The opposite asset disposals will simply deal with the stability (of the debt),” he mentioned, with out offering a valuation on these property.
A bourse submitting final December mentioned the KNM board had permitted the itemizing of Borsig on SGX with a view of attaining a market capitalisation of as much as US$300 million (RM1.41 billion at the moment) and a placement of 49% of the enlarged share capital.
The proposed flotation kinds a part of the regularisation plan of KNM to be submitted to Bursa Securities sooner or later to deal with its PN17 standing.
“We’re right here to remain and we’re going to make KNM an incredible firm going ahead. I consider we will overcome all of the challenges coming our method,” Ravindrasingham added.
KNM’s shares closed half-a-sen or 4.8% larger on Friday, valuing the group at RM445 million.