KUALA LUMPUR (June 6): The Italian government has again rejected the proposed disposal by KNM Bhd’s (KL:KNM) wholly-owned subsidiary KNM Europa BV of its entire stake in FBM Hudson Italiana SpA (FBM Hudson).
The transaction had again failed to obtain the Golden Power clearance from the Italian government, KNM said in a filing with Bursa Malaysia on Thursday.
According to the International Association of Defense Counsel, the Italian government's Golden Power refers to its special power to stop any foreign direct investment, or halt corporate transactions involving strategic assets that include defence, national security, and infrastructure such as transportation, energy and communications.
FBM Hudson is primarily involved in the design and manufacture of heat exchangers and high-pressure equipment for oil and gas, oil refining, petrochemicals, chemicals, power and fertiliser businesses.
“Presently, the management of KNM is reviewing and discussing with all the parties concerned for the steps moving forward. Further development in relation to the proposed disposal will be announced in due course,” KNM said.
The Italian government had previously rejected the proposed disposal of FBM Hudson last November when KNM had proposed to sell the company to the United Arab Emirates' Petro MAT FZCO for 22 million euros.
Petro MAT had also failed to obtain the same Golden Power clearance from the Italian government.
This time, KNM Europa was to dispose of the company to Milan-based BM Carpenterie Oil & Gas SRL, which offered to acquire 60% of the stake in FBM Hudson for 9.9 million euros, and Verona-based Officine Piccoli SpA, which sought to acquire the remaining 40% stake for 6.6 million euros. The total offer came up to 16.5 million euros (approximately RM84.99 million).
Under the agreement signed in March, both buyers were to take over the 11.5 million euro loans that FBM Hudson owes to KNM as settlement for sale consideration.
Although the proposed disposal is expected to result in an estimated loss of about RM94.34 million, the cash-strapped engineering group has been looking to exit the loss-making company and that the expected proceeds to be received from the proposed disposal has been planned for repaying of borrowings and working capital purposes.
Prior to Petro MAT, KNM had another deal to dispose of FBM Hudson to British Midland FZE for 12 million euros, which did not materialise. At the time, KNM did not disclose the reason behind the change in buyer.
KNM’s share price closed slightly higher by 0.5 sen or 5.56% at 9.5 sen on Thursday, valuing the group at RM365.14 million. Over the past one year, the counter has risen by 18.75%.
Read also: