Rules apply to everyone as Bursa warns MAA over KNM

BURSA Malaysia has done what a regulator should: stand firm when corporate desperation threatens to bend the regulator’s rules.

Its warning to MAA Group Bhd – KNM Group Bhd’s largest shareholder – not to proceed with a shareholder vote on the sale of KNM’s prized German unit, Deutsche KNM GmbH (DKNM), without following proper listing procedures is a timely intervention.

MAA’s attempt to push through the €270mil (RM1.34bil) sale to Japan’s NGK Insulators looks, on the surface, like a bold rescue act.

But the regulator’s stance has reminded the market that form matters as much as substance.

The DKNM disposal qualifies as a major transaction, which by law requires independent advisers, valuations, and a circular vetted by Bursa before shareholders can vote.

KNM is already skating on thin ice.

Its Practice Note 17 regularisation plan was rejected earlier this month for failing to show sustainable earnings.

The DKNM sale would leave KNM mainly with its loss-making Malaysian operations and an order book comprising a mere 1.5% of its restructured share capital.

KNM’s shares have been suspended since Oct 13 and the company could be delisted if the appeal fails.

Instead of stabilising what remains of the Malaysian business, MAA is racing to close the sale before an Oct 30 deadline to satisfy creditors – even after KNM’s own board rejected the call for an EGM.

That haste might appease lenders temporarily, but brings to light the company’s governance issue.

Bursa’s caution is not bureaucratic obstruction, it’s a safeguard.

KNM secured a big win when the High Court approved the sale of DKNM, allowing the company to go ahead with the disposal of one ordinary share in DKNM, representing 100% equity interest.

The sale is seen as crucial to helping the company pay off debts but it would also leave KNM with only its struggling Malaysian operations

Essentially, Bursa’s firmness signals a strong difference in opinion when it comes to disposal of the asset.