Tunku Kamariah: KNM Board alleged to have breached court order over creditors meeting
Furthermore, claims regarding the Borsig listing on the SGX have been challenged, with the only known approval being at the board level, which many argue is insufficient for such a significant transaction.
KUALA LUMPUR, 15 October 2023: In an unexpected turn of events, a significant assembly of creditors has raised concerns regarding the Explanatory Statement (ES) proposed by the current board of directors of KNM Group Berhad (“KNM”, stock code: 7164), a PN17 company on 11th October 2023. The creditors, representing a substantial voting block, have highlighted several discrepancies in the ES, leading to a prolonged high court hearing.
The court, siding with the creditors, has mandated the appointment of an independent Liquidator to critically assess the [viability of the] plan, with findings to be presented on 23rd October 2023. In the hearing, a significant number of creditors ask the judge to appoint an expert to review and report on the viability of the Explanatory Statement.
Despite the High Court of Malaysia’s directive to postpone the scheduled Creditor meeting, the Company announced on the evening of 11th October 2023 that it would “convert the Court-Convened Meetings into an informal meeting to seek the views of the Scheme Creditors with regard to the Proposed Scheme of Arrangement” the next day and the KNM Board of Directors proceeded with the meeting and even conducted a vote on the plan. This move, seen by many as a direct violation of the court’s order, has raised eyebrows in the business community and asked, “Isn’t this a contempt of court?”
Alleged breach of court order
[In a statement issued by KNM after the court’s decision to appoint the independent liquidator,] KNM circulated to the members’ of the press, claiming that in their “informal” creditors’ meeting, the majority of the creditors supported the misleading and inaccurate ES. A few of the Press were misled to thinking that the statement was official KNM statement since KNM letterhead was on the statement. “An informal meeting made through an official statement?”
“The KNM directors appear to have failed to comply with the judge order, likely to be in contempt of court. Orders are not issued by courts for parties to manipulate at their leisure. The primary purpose in seeking a contempt finding is to vindicate the integrity of its own authority. Contempt proceedings have the primary purpose of upholding the dignity and authority of the court,” according to Flavio Porro.
”Certainly their actions were to influence shareholders in the upcoming EGM that they have majority creditors support. However, one might question, what support exist when you don’t even have a valid scheme. Creditors should question the sincerity of the current board,” said TunkuKamariah.
Tunku Yaacob, along with several members from MAA, spearheads the current board. Their recent actions, perceived by many as an attempt to assert dominance over legal proceedings, have stirred controversy. With the upcoming Extraordinary General Meeting (EGM) on the horizon, stakeholders are keenly observing the board’s next moves.
Among the issues raised by the creditors is the board’s alleged failure to adhere to [give scheme creditors a] 14-day notice period as stipulated by the Court Order. Furthermore, claims regarding the Borsig listing on the SGX have been challenged, with the only known approval being at the board level, which many argue is insufficient for such a significant transaction. [Questions were raised as to why not even a conditional shareholder resolution approving proposed transactions were not even sought by the sitting Board.
New direction under Tunku Kamariah
The sale of the FBM Hudson Group and the intercompany debts have also been brought into question, with discrepancies in the reported figures causing concern among stakeholders.
In a significant development, Tunku Kamariah Aminah MaimunahIskandariah Binti Sultan Iskandar, along with German investor Andreas Heeschen, have proposed a new direction for KNM Group Berhad. Heeschen, known for his business acumen, said he will introduce a 110-million-euro (RM550 million) bond, backed by European institutional investors, aiming to revitalise KNM Group Bhd. This isvonly the first among other two planned financial instruments available to the new group. The proposed team, which includes notable figures such as Dato’ Abd. Ghani bin Yusof, Dato’ Zaidi bin Mat Isa @ Hashim, William H Van Vliet III, Flavio Porro and Edwin Silvester Das, have outlined a comprehensive five-year plan to rejuvenate the company’s assets and operations.
The group has expressed reservations about the current board’s asset disposal strategy, emphasising the need to prioritise the interests of the 34,018 KNM shareholders.
As the EGM approaches, shareholders are faced with a pivotal decision that will shape the future of KNM Group Berhad. The outcome of this meeting is eagerly anticipated by the business community and stakeholders alike.