Green light for KNM rights issue (7164)

KNM Group Bhd has received shareholders' approval for a proposed rights issue to raise about RM195.57 million.

Group chief financial officer Richard Voon said the rights issue would
further improve the company's gearing to 0.55 times from 0.71 times as
at December 31 2011.

According to its circular to shareholders, as at June 30 2012, KNM's total bank borrowings amounted to about RM1.06 billion.

It will use RM150 million raised from the rights issue to repay the
outstanding bank borrowings. Some RM39.57 million from the proceeds
will be spent on working capital.


"Our gearing would also further improve to about 0.28
times when the free warrants are fully exercised," Voon told pressmen
after the KNM's extraordinary general meeting here yesterday.

KNM is proposing a renounceable one-for-two rights issue of 489 million
new shares at an indicative price of RM1 plus 489 million detachable
free warrants.

The indicative price of RM1 will be payable in
two calls, of which the first call of 40 sen will be payable in cash
from subscribers, and the second call of 60 sen will be capitalised
from KNM's share premium account.

The theoretical ex-rights
price is about 60 sen, 50 per cent above the first call of 40 sen. Each
rights share comes with one detachable warrant.

At the
meeting yesterday, shareholder deliberated about a quarter-
past-the-hour mark before a poll was called by Lembaga Tabung Haji,
which holds 4.6 per cent of the company. All resolutions passed.

"This is a good start for us as this approval clearly demonstrates the
shareholders' faith in us. Now that we have their support, we will
fully kick-start this exercise, which we hope to complete in November
2012," the group's executive chairman and chief executive officer, Lee
Swee Eng, said in a statement released after the meeting yestersday.

Meanwhile, Voon said KNM's proposed listing of its 100 per cent owned
Germany-based Borsig Beteiligungsverwaltungsgesellschaft mbH on the
Singapore stock exchange's main board next year will help unlock its
value.

"Borsig is running at full capacity and they need an
avenue to alleviate some of these existing bottlenecks. Hence, the
proceeds will be used to increase its capacity and improve capability
as well as enhance its working capital," Voon said.

He denied
that proceeds from Borsig's initial public offering (IPO) would be used
to fund the equity portion of KNM's waste-to-energy power plant venture
in Peterborough, UK.

However, he noted that Borsig would stand to benefit from the Peterborough project as a vendor.

Borsig is a leading designer and manufacturer of high-end process gas
waste-heat boilers, quench coolers and scrapped-heat exchangers.

According to UOB Bank Ltd in the preliminary valuation to the group,
the proposed listing of Borsig will have an estimated IPO market
capitalisation of between RM1.8 billion and RM1.9 bilion.

About 60 per cent of KNM's total order book of RM5.1 billion is from renewable energy projects.