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aws账号(www.2km.me)_KNM needs clean-up to exit liquidity crisis

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Selling assets: KNM’s ethanol plant in Thailand. The group plans to sell its 72% equity interest in Impress Ethanol Co Ltd to fully settle the outstanding amount related to its Thai bonds.

FRESH from suffering a bond default, KNM Group Bhd has a lot of cleaning to do in order to put its business back on track.

The group is in the midst of a liquidity crisis with its current liabilities exceeding its current assets, a situation that has prolonged since 2020.

KNM is also in need of cash to meet its obligations, especially with a debt of RM1.28bil on its books as at Sept 30.

In comparison, its cash holding stood at just about RM258mil. Almost RM706.6mil or 55% of this debt is short-term in nature.

Amid lower production output and a slow order replenishment that have affected KNM’s revenue, the higher interest paid on borrowings is also causing the group to bleed.

In the first nine months ended Sept 30, the group recorded a finance cost of RM79.2mil, exceeding the operational profit of RM73.1mil.

KNM is a diversified multinational group with core businesses in project management, engineering, manufacturing and construction services for the renewable energy, power, utilities, refining and petrochemical industries.

KNM’s bid to fundraise via a private placement of 30% share capital was rejected by shareholders in June.

Nevertheless, on Nov 22, the group once again proposed a private placement to raise RM53.46mil for debt repayment and working capital. This time around, KNM plans to place out 10% of its share capital.

The group is also planning to raise cash via asset monetisation.

On Dec 22, KNM announced five measures to improve its financial position, including the listing of its crown jewel Germany-based Borsig GmbH and the disposal of its Thai and UK assets.

The group is also looking at injecting selected subsidiaries into a special-purpose acquisition company (SPAC) “for a combination of cash consideration and certain percentage of shares in the SPAC”.

The measures were recently announced as the group is seeking to resolve its recent default on its 2.78 billion baht (RM346.76mil) Thai bonds.

The default, according to KNM, is an “isolated though material event”.

KNM said the proceeds from the proposed Thai asset disposal, namely the 72% equity interest in Impress Ethanol Co Ltd (IEL), will be used to “fully settle” the outstanding amount related to the Thai bonds.

IEL owns and operates a 200,000-litre-per day bio-ethanol plant in Thailand and its expansion of additional 300,000-litre-per day production capacity is under construction.

“The financial needs of KNM had arisen, in the first instance, due to the prolonged consequences of the Covid-19 pandemic, which had affected KNM and its traditional market far beyond initial assumptions in early 2020 and which subsequently played a domino effect on several businesses, investments and operations at group level,” according to KNM in an earlier statement.

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