KNM plans to have a re­cur­ring in­come stream

> Group wants to cut de­pen­dence on one-off con­tracts

The Sun (Malaysia) - - SUNBIZ - BY EE ANN NEE

KUALA LUMPUR: Process equip­ment man­u­fac­tur­ing, en­gi­neer­ing and con­struc­tion group KNM Group Bhd aims to de­rive at least 30% of its in­come from re­cur­ring jobs by 2019.

The tar­get is part of a five-year plan, which starts in 2017, to in­crease its re­cur­ring in­come stream to 70% of to­tal in­come.

KNM group fi­nance di­rec­tor Ter­ence Tan said cur­rently all its in­come is from one-off con­tracts.

“Our long-term strat­egy for KNM is to de­velop a sus­tain­able re­cur­ring in­come stream. In five years, we want 70% of our in­come de­rived from a re­cur­ring stream,” he told a press con­fer­ence af­ter KNM’s sign­ing cer­e­mony for fi­nanc­ing fa­cil­i­ties of up to RM689.9 mil­lion yes­ter­day.

Tan said 2017 will be the first year the group sees a re­cur­ring in­come stream from its bioethanol project in Thai­land.

The first phase of 72%-owned sub­sidiary Im­press Ethanol Co Ltd’s (IEL) bioethanol plant has a pro­duc­tion ca­pac­ity of 200,000 litres ethanol a day.

Tan said af­ter the is­suance of its Thai bonds by year-end, it will kick­start the sec­ond phase of the bioethanol plant, which will boost its pro­duc­tion ca­pac­ity by 200,000 litres ethanol a day. “We’re not look­ing at just the re­cur­ring in­come in Thai­land, we also have the Peter­bor­ough project in Lon­don, which is another re­cur­ring in­come stream but it will only come on­stream af­ter 2018.”

KNM group CEO Lee Swee Eng said it is tar­get­ing for trans­for­ma­tion into hav­ing more re­cur­ring in­come in­stead of be­ing a purely con­tracts player.

“We’re there to stay in Thai­land. We’re also look­ing at other op­por­tu­ni­ties on re­new­able en­ergy in Thai­land and wasteto-en­ergy projects within the next five years,” added Lee.

Ear­lier, at the sign­ing cer­e­mony, KNM sealed deals for bonds of up to 2.78 bil­lion baht (RM329.9 mil­lion) guar­an­teed and is­sued by Credit Guar­an­tee and In­vest­ment Fa­cil­ity (CGIF) (Thai bonds) and RM360 mil­lion more fi­nanc­ing fa­cil­i­ties from Dana­jamin Na­sional Bhd and Af­fin Is­lamic Bank Bhd.

KNM will use pro­ceeds from the Thai bonds to sup­port IEL’s bioethanol plant in Thai­land. KNM is the first Malaysian com­pany to ob­tain a credit guar­an­tee from CGIF for its bond to be launched in Thai­land, and the first Malaysian-listed com­pany to is­sue baht-de­nom­i­nated bonds in the Thai cap­i­tal mar­ket.

CGIF was es­tab­lished by the 10 mem­bers of the As­so­ci­a­tion of South­east Asian Na­tions (Asean) to­gether with China, Ja­pan, South Korea (Asean+3) and the Asian De­vel­op­ment Bank (ADB) to help com­pa­nies that oth­er­wise would have dif­fi­culty tap­ping lo­cal bond mar­kets to se­cure longer-term fi­nanc­ing, re­duce their de­pen­dency on short-term for­eign cur­rency bor­row­ing to mit­i­gate cur­rency and ma­tu­rity mis­matches.

Mean­while, the Is­lamic guar­an­tee fa­cil­ity of up to RM200 mil­lion from Dana­jamin for a pro­posed cap­i­tal mar­ket in­stru­ment and blan­ket work­ing cap­i­tal fa­cil­i­ties of up to RM160 mil­lion from Af­fin Is­lamic are for con­tracts re­lat­ing to the Re­fin­ery and Petro­chem­i­cal In­te­grated De­vel­op­ment project in Pengerang, Jo­hor.

Lee (seated sec­ond from left) at the sign­ing cer­e­mony yes­ter­day. Also present are (seated from left) CGIF vice-pres­i­dent of op­er­a­tions Khoo Boo Hock, Dana­jamin Na­sional Bhd chief cor­po­rate and in­vest­ment of­fi­cer Mohd Amri Mohd Sofian, Af­fin Bank Bhd head of cor­po­rate and com­mer­cial bank­ing Prab­hakaran GK and Af­fin Hwang In­vest­ment Bank Bhd se­nior di­rec­tor and head of client cov­er­age Lai Sin Kee.

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