KNM corporate battle heats up as ex-director cries foul

 

KNM’s former executive director Flavio Porro (left) claims that CEO and managing director Ravindrasingham Balasingham had issued ‘misleading statements’.

PETALING JAYA: The intensity of the takeover battle for KNM Group Bhd moved up a notch after former executive director Flavio Porro, a member of the group seeking to oust the board, alleged that CEO and managing director Ravindrasingham Balasingham had issued misleading statements, and the board had launched a media campaign against his team.

“It is deeply unfortunate that a targeted media campaign has been launched against the new shareholders and proposed board members. This campaign is not only shallow and disrespectful but also aims to maintain an unsatisfactory status quo,” said Porro, an Italian national who retired as executive director of the oil and gas services provider last December.

“The current board, which has remained largely unchanged since October 2021, has been misleading in its public statements. We are fully committed to transparency and will take proactive steps to counter any misinformation,” he added.

The KNM corporate tussle came to light on Sept 4 when German tycoon Andreas Heeschen, Porro, and seven other shareholders holding 10.68% or 432.46 million shares requisitioned for an extraordinary general meeting (EGM) to remove the current board led by chairman Tunku Yaacob Khyra, the largest shareholder with a 9.44% stake.

They are putting up a slate of new directors to be appointed including Heeschen, Porro, and Johor princess Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar who is to replace Tunku Yaacob, a member of the Negeri Sembilan royal family.

Porro also lambasted Ravindrasingham for claiming on Sept 8 that Heeschen’s takeover bid was a “cheaper way” to acquire the group’s prized asset – German machinery and equipment company Borsig Group which is valued in excess of €300 million (RM1.5 billion).

“Contrary to misleading statements by the current CEO, Ravindrasingham, the new board’s objective is not to acquire Borsig on the cheap.

“Our primary focus is on a holistic and sustainable approach to growth and debt repayment. We are supported by a robust group of shareholders with strong roots in Malaysia, as well as international markets like the US, EU, UK, and Eastern markets,” he said.

Selling at ‘fire-sale prices’

Porro said one of the alarming issues that compelled him to re-engage with the Practice Note 17 (PN17) company was the board’s hasty and ill-advised decision to liquidate valuable assets at “fire-sale prices”.

He was referring to the recent sale of Italy-based FBM Hudson Group for €22 million (RM110 million), stressing his concern that the board approved the sale despite the unit’s assets being valued at over €40 million (RM200.7 million).

“This is not just a financial misstep; it’s a legal quagmire. The sale is also subject to the country’s assets protection clearance which could not only result in legal repercussions but also further erode shareholder value,” he warned.

He said the group’s other valuable assets in Thailand and the UK, are stuck in an embarrassing stalemate with nobody in the driving seat.

Porro unveiled the takeover group’s “global regularisation plan” which seeks to satisfy all stakeholders, including creditors, shareholders, employees, and customers.

Additionally, the proposed new board wants to align the restructuring plan with KNM’s long-term strategic goals, thereby enabling the company to leverage its competitive advantages.

“This is in stark contrast to the current management’s short-sighted focus on asset-stripping,” he said.

The new board also wants to introduce a sustainable growth strategy that spans over the next five years, focusing on stability during and after repayment of the company’s debt amounting to RM1.17 billion.

IPO versus disposal for Borsig

Porro claims that days before his departure from KNM, the board abruptly cancelled the Borsig sale to explore a potential listing exercise.

“While the sale might have been the right decision at that time, the new board aims to re-evaluate this approach and other key decisions to present better solutions that maximise shareholder value,” he said.

He said during his tenure, KNM had a binding share purchase agreement for Borsig valued at €220.8 million (RM1.11 billion).

“We will delve into these complex matters in greater detail after the EGM, with our immediate focus being on ensuring continuity in company operations.

The board is looking at a pre-initial public offering (IPO) of Borsig by end of this year, and an IPO by the second half of 2024 on the Singapore Exchange. KNM could potentially generate proceeds of about RM900 million from the flotation while retaining a 40% stake, according to Ravindrasingham.

The board announced yesterday it will convene an EGM on Oct 16 to vote on the resolutions to remove its directors and appoint new ones.

KNM’s shares closed 1.5 sen or 14.3% higher at 12 sen, valuing the group at RM486 million. - FMT