Tuesday, 23 March 2010

KNM's shareholders facing uncertainties

KNM: No extension for BlueFire

KNM Group Bhd (7164) said it will not extend BlueFire Capital Group Ltd's exclusivity period for due diligence, which expired yesterday.

BlueFire, an entity controlled by founder and group managing director Lee Swee Eng, had offered to buy out KNM at 90 sen per share, valuing the process equipment maker at RM3.6 billion.

Lee, together with GS Capital Partners VI Fund LP, a private equity fund of the Goldman Sachs Group Inc, and Mettiz Capital Ltd, had made a conditional offer to buy KNM's assets on February 4.

The offer was conditional upon a due diligence that should be completed by March 22 and which includes a final valuation of the assets within the group. Lee owns 23.64 per cent of KNM.

In a filing to Bursa Malaysia yesterday, KNM said BlueFire is "still in continued discussions with the company and the parties have agreed to endeavour to conclude discussions by April 16, 2010".
It added that an announcement will be made on the outcome of such discussions when they are concluded.

Over 90 per cent of KNM's revenues are realised from the export markets and international business.

KNM posted a loss of RM31 million for its fourth quarter ended December 31 2009, which was a significant dip from its third quarter profit of RM32 million.

As a result of the poor fourth quarter, KNM's full-year 2009 net profit almost halved to RM171 million, compared with the previous year's RM336.4 million.

The main reason for the poor fourth quarter was due to provisioning for the foreseeable losses in its operations in Brazil, Canada and Indonesia, coupled with a revaluation of the group's Canadian properties. It was the result of heightened competition in some of the lower margin business segments of the group.


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