KNM to dispose of Borsig for Rm1.03bil

PETALING JAYA: KNM Group Bhd’s subsidiary Deutsche KNM Gmbh (DKNM) has entered into an agreement with GPR Siebzigste Verwaltungsgesellschaft mbh (GSV) for the proposed disposal of 100% equity interest in Borsig Gmbh for a consideration of 220.8mil (Rm1.03bil).

The sale comes as no surprise as the cash-strapped group has been working towards the monetisation of Borsig, which will go towards addressing its financial constraints.

“While Borsig Group has contributed positively to the financial performance of KNM Group over the years, the group is undertaking the proposed disposal to provide a timely cash injection to improve the group’s financial position,” it said in a filing with Bursa Malaysia.

It said the proceeds received from the disposal after deducting the amount of the cash upstream loan receivables and exit bonus will amount to 207.87mil (Rm979mil).

Of this amount, 188.87mil (Rm889mil) will go towards the repayment of bank borrowings,

15.55mil (Rm73.2mil) for working capital and 3.45mil (Rm16.2mil) for expenses in relation to the proposed disposal.

The group said its total bank borrowings are expected to reduce from Rm1.28bil to Rm391.53mil upon the completion of the proposed disposal and repayment of borrowings.

Borsig, which was purchased by KNM via DKNM in 2008, is principally involved in the manufacturing of process equipment mainly used in the petrochemicals as well as oil and gas industries.

Borsig and its subsidiaries contributed about 59.51% of the group’s total revenue for the latest audited financial year ended Dec 31, 2020 (FY20), and about about 67.72% of the group’s total revenue for the unaudited FY21.

According to KNM, it will have recognised a total cash inflow of about 398.21mil (Rm1.9bil).