KNM Group Bhd, led by Executive Vice-Chairman Gan Siew Liat, has proposed a private placement to raise up to RM167.9 million, representing 30% of the company’s share capital. The move aims to repay bank loans and provide working capital, but it has raised eyebrows due to the significant allocation to a major shareholder.
Notably, 50% of the placement shares will be offered to Gan Siew Liat, who is not only the executive vice-chairman but also the wife of former CEO Lee Swee Eng. This arrangement has sparked discussions about potential conflicts of interest and the concentration of control within the company.
The issue price for independent investors is set at 16 sen per share, while Gan Siew Liat will pay 18 sen apiece. From the expected gross proceeds:
- RM120 million will be used to repay bank borrowings
- RM44.08 million will be allocated for working capital
KNM Group claims this move could save them approximately RM5.4 million annually in interest payments, based on a 4.55% interest rate. The company’s total bank loans, including overdrafts, bank acceptance drafts, revolving loans, and term loans, amount to RM1.36 billion.
The working capital will be used as follows:
- 60% for raw materials and consumables
- 30% for subcontractor and supplier payments
- 10% for shipping and logistics expenses
This private placement follows a previous exercise announced on January 15, 2021, which aimed to raise RM52 million for similar purposes.
The concentration of shares in the hands of Gan Siew Liat, coupled with her husband Lee Swee Eng’s previous involvement in the company, raises questions about the balance of power within KNM Group. Shareholders and market observers will be watching closely to see how this private placement impacts the company’s governance and future direction.
