In a statement dated 8 Sept 2023 titled `Tunku Yaacob Khyra serious about his controlling stake in KNM’, the CEO of KNM made a public appeal claiming that the current board and management, have earned the confidence of a majority of the creditors and any attempts to remove and replace them could derail the company's plans to secure an extension to its restraining order in place to stop creditors from calling on its loans.
He also said to quote – ad verbatim - At a recent town hall meeting, where RM1.024 billion of the RM1.167 billion of the creditors gathered, continued support is intact for the extension of the restraining order until December 2023. The fact that these creditors continued to support the efforts of the Board and Management of KNM Group Bhd is testimony of their vote of confidence in the strategies that are being implemented by the current Board of Directors and Management.
In an announcement to Bursa Malaysia on 3 Oct 2023, the company again reiterated that the Asian Development Bank’s trust fund Credit Guarantee and Investment Facility, TransAsia Private Capital Ltd and Danos Ltd, and the majority of the lenders (including Bank of China (M) Bhd) are working closely with the board and its CEO and managing director and its major creditors are supportive of its restructuring exercises to get back on its feet.
In a statement dated 9 Oct 2023, MAA who holds an 8.55% equity stake, commended the KNM CEO for successfully securing the confidence and support of its creditors since his appointment on Nov 8, 2022, thus ensuring that the company will secure sufficient support for the scheme of arrangements to be adopted at the forthcoming court-convened creditors’ meeting.
It was indeed surprising to read that on 12 Oct 2023, several substantial scheme creditors of KNM Group Bhd and subsidiary KNM Process System Sdn Bhd obtained an order from the Kuala Lumpur High Court directing the Chairman of the scheme of arrangement (SOA) to postpone the Creditors’ meeting scheduled for 12 Oct 2023 to a later date so as to enable the Court to appoint an approved liquidator to make an assessment report on the viability of the proposed scheme.
The Board of Directors through the CEO of the company had represented publicly, no less than 3 times that they have the support of a majority of the creditors for the scheme of arrangement.
Even though the report of 12 Oct 2023 did not disclose who are those substantial scheme creditors, it appears that not a majority of the creditor's supporters supported the Scheme of Arrangement as claimed and represented by the Board publicly no less than 3 times.
Based on the report of 12 Oct 2023, the company was represented at the hearing.
Why the appointment of an approved Liquidator to make an assessment on the viability of the proposed scheme was not challenged by the company’s solicitors?
Is it because the Court is of the view, after hearing representations from both sides, that the Scheme of Arrangement is not viable?
Interestingly, the Board had on 13 Oct 2023 issued a statement to state that the company held an informal meeting on 12 Oct 2023 where all creditors were invited to enable the board to address queries that some of the creditors might have on a proposed scheme of arrangement and “a sufficient majority of the creditors in attendance” repeated their support for the draft SOA proposed by the current management on condition the current board and management remains intact.
The above statement, however, did not address the report of 12 Oct 2023 where it was reported that creditors were represented in that hearing where the court decided for the Chairman of the Creditors meeting to postpone the meeting on 12 OCt 2023.
Investors can safely rely on factual and verifiable historical information given by the board.
This can include information about the company's assets, and debt, to name a few.
As opposed to forecasts or predictions, this information is either true or false.
The board therefore has an obligation to disclose correct information of this kind.
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