Financially Impacted KNM Plans For Several Corporate Exercises To Raise Funds

KNM Group Berhad is planning for several corporate exercises which the group has identified to be the most suitable measure to enhance its financial position and give the company a forward momentum.

Based on its reports, the group has raised the need for financial stability which was the result of the prolonged consequences of the COVID-19 pandemic that had affected KNM and its traditional market far beyond its initial assumptions in early 2020. This had subsequently played a domino effect on several businesses, investments and operations at the group level. Recently the announced events of default, due to the non-payment of the outstanding principal sum of THB2,780 million and coupon payment on the bonds issued by KNM in Thailand, in itself is regarded by the board as an isolated though material event, which is predominantly attributable to the negative impacts of the COVID-19 pandemic.

Under the current circumstances, its board is committed to meeting its lenders’ and shareholders’ expectations to monetarise some of its assets. Among them is the divestment of the equity interest of assets in the bio-ethanol plant in Thailand via its wholly-owned subsidiary, KNM Renewable Energy Sdn Bhd, which owns an effective equity interest of 72.0% in Impress Ethanol Company Limited. This company owns and operates a 200,000 litres per day bio-ethanol plant in Thailand and its expansion of additional 300,000 litres per day production capacity is under construction.

The group is also in negotiation with potential investors who are interested to acquire the Thai Assets and as part of the negotiation, KNM Group intends to remain as the engineering, procurement, construction and commissioning contractor for the additional 300,000 litres per day bio-ethanol plant expansion based on a new EPCC contract to be agreed upon with the new investors. It intends to conclude the deal within the next 3 months and use the proceeds to fully settle the outstanding amount related to the Thai Bonds.

Separately, it is also looking to divest assets in UK mainly the waste to energy plant project in Peterborough, United via its various subsidiaries which own the land and project assets related to the project. This is currently underway and is expected to be closed in 3 months time.

  1. It is also looking to inject some of its subsidiaries into a special purpose acquisition company (SPAC), apart from that it has been in discussion for loan arrangement with a Germany bank on a Proposed Term Loan, the proceeds will be used to repay borrowings, working capital and other purposes to be determined by the Board at a later date.
  1. Initial Public Offering of BORSIG group of companies will proceed as planned, as is expected to be completed in the next 6 to 12 months.
  2. KNM added that the proceeds from the Corporate Exercise will not only enable us to rectify the outstanding amount due under Thai Bonds, but will also enable the Management to focus on growing our businesses and unlock the sum-of-the-parts value of KNM Group for its shareholders.

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