NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : FUND RAISINGKNM GROUP BERHAD ("KNM" OR THE "COMPANY") PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY SHARES IN KNM

NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : FUND RAISING KNM GROUP BERHAD ("KNM" OR THE "COMPANY") PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY SHARES IN KNM

KNM GROUP BERHAD

Type	Announcement
Subject	NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS)
	FUND RAISING
Description	KNM GROUP BERHAD ("KNM" OR THE "COMPANY")

PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY

SHARES IN KNM

On behalf of the Board of Directors of KNM, M&A Securities Sdn Bhd wishes to announce that the Company proposes to undertake a private placement of up to 10% of the issued ordinary shares in KNM ("Proposed Private Placement").

Further information on the Proposed Private Placement is disclosed in the attachment herein.

This announcement is dated 15 January 2021.

Please refer attachment below.

Attachments

KNM - Private Placement 150121.pdf380.5 kB

KNM GROUP BERHAD ("KNM" OR THE "COMPANY")

PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY SHARES IN KNM

1. INTRODUCTION
   On behalf of the Board of Directors of KNM ("Board"), M&A Securities Sdn Bhd ("M&A Securities") wishes to announce that the Company proposes to undertake a private placement of up to 296,923,400 new ordinary shares in KNM ("KNM Shares" or "Shares"), representing not more than 10% of the issued ordinary shares in KNM ("Proposed Private Placement").
   The Proposed Private Placement shall be undertaken in accordance with the general mandate
   pursuant to Sections 75 and 76 of the Companies Act 2016 ("Act") approved by the shareholders of KNM at the 18th Annual General Meeting ("AGM") of the Company held on 13 August 2020 which authorises the Board to issue new KNM Shares not exceeding 20% of the total number of issued shares of the Company ("20% General Mandate"). The 20% General Mandate, unless revoked or varied by the Company at a general meeting, shall continue to be in force until the conclusion of the next AGM of the Company.
   Further details of the Proposed Private Placement are set out in the ensuing sections.
2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT
   As at 14 January 2021, being the last practicable date preceding the date of this announcement ("LPD"), KNM has:
3. 1. an issued share capital of RM2,005,610,754 comprising 2,969,234,280 KNM Shares (excluding 23,341,275 Shares held as treasury shares by the Company) ("Treasury Shares"); and
   2. 214,992,300 outstanding employees' share option scheme ("ESOS Options").

The Proposed Private Placement will entail the issuance of up to 296,923,400 new KNM Shares ("Placement Shares"), representing not more than 10% of the existing number of issued Shares as at the LPD (before the exercise of ESOS Options and excluding Treasury Shares). For the avoidance of doubt, any increase in the number of issued Shares arising from the resale of Treasury Shares or exercise of the ESOS Options will not affect the number of Placement Shares to be issued under the Proposed Private Placement.

Subject to the prevailing market conditions and depending on investors' interest at the point of implementation, the Proposed Private Placement may be implemented in a single or multiple tranche(s) within 6 months from the date of approval of Bursa Securities for the Proposed Private Placement or such other approved extended period.

On 20 November 2020, the Company completed a private placement exercise of 269,184,800 new Shares pursuant to the 20% General Mandate ("Previous Private Placement").

The Proposed Private Placement complies with Paragraph 6.03(1) of the Listing Requirements and the "Additional Temporary Relief Measures to Listed Issuers" granted by Bursa Securities on 16 April 2020, which states that a listed issuer shall not issue more than 20% of its total issued shares (excluding treasury shares) unless shareholders' approval is obtained.

2.1 Basis of arriving at the issue price of the Placement Shares

The issue price of each tranche of the Placement Shares, where applicable, shall be determined separately and fixed by the Board at a later date after obtaining the relevant approvals for the Proposed Private Placement. The Board will take into consideration amongst others, the prevailing

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market conditions and the provisions of Paragraph 6.04(a) of the Listing Requirements, in determining the issue price of the Placement Shares at a discount of not more than 10% to the volume weighted average market price of KNM Shares for the five (5) market days ("5D-VWAMP") immediately preceding the price fixing date(s).

For illustrative purposes, assuming the Placement Shares are issued at an indicative issue price of RM0.185 per Placement Share ("Indicative Issue Price"), this represents a discount of approximately 8.19% to the 5D-VWAMP of KNM Shares up to and including the LPD of RM0.2015 per KNM Share. Based on the Indicative Issue Price, the Proposed Private Placement will raise gross proceeds of RM54,930,829. The mechanism to determine the issue price of each tranche of the Placement Shares shall be determined separately in accordance with market-based principles.

2.2 Placement arrangement

The Placement Shares will be placed to independent investor(s) ("Placees"), where the Placees shall be person(s) or party(ies) who/which qualify under Schedule 6 and Schedule 7 of the Capital Markets and Services Act 2007, who shall be identified at a later date.

In accordance with Paragraph 6.04(c) of the Listing Requirements, the Placement Shares will not be placed to the following parties:

1. the interested director, interested major shareholder, interested chief executive of KNM or a holding company of KNM, or interested persons connected with such director, major shareholder or chief executive of KNM; and
2. nominee corporations, unless the names of the ultimate beneficiaries are disclosed.

Subject to the prevailing market conditions and depending on investors' interest at the point of implementation, the Proposed Private Placement may be implemented in a single or multiple tranche(s) within 6 months from the date of approval of Bursa Securities for the Proposed Private Placement or such other approved extended period.

1. Ranking of the Placement Shares
   The Placement Shares shall, upon issuance and allotment, rank pari passu in all respects with the then existing issued KNM Shares, save and except that the holders of the Placement Shares shall not be entitled to any dividends, rights, allotments and/or other forms of distributions that may be declared, made or paid to the shareholders of the Company, for which the relevant entitlement date is prior to the date of allotment and issuance of the Placement Shares and the Placement Shares will be subject to all the provisions of the Constitution of the Company relating to transfer, transmission and otherwise.
2. Listing of and quotation for the Placement Shares
   KNM shall make an application to Bursa Securities for the listing of and quotation for the Placement Shares on the Main Market of Bursa Securities.

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2.5 Utilisation of proceeds

For illustrative purposes, the placement proceeds to be raised from the Proposed Private Placement of RM54,930,829 (based on the Indicative Issue Price) are expected to be utilised by KNM and its subsidiaries ("KNM Group" or "Group") in the following manner:

								#Expected
								timeframe for
						Amount		utilisation of
	Details		Notes	RM'000		proceeds
Payment for procurement of raw materials and	(a)	33,631		Within 6 months
consumables,	payment	to	sub-contractor/suppliers
for fabrication	and	site	works, professional
services and logistic expenses
Repayment of bank borrowings		(b)	20,000		Within 3 months
Estimated expenses for the Proposed Private Placement	(c)	1,300		Within 1 month
Total						54,931
Notes:

• From the listing date of Placement Shares on the Main Market of Bursa Securities.

1. Under the Previous Private Placement, the Company had raised a total amount of RM44.46 million, of which a total amount of RM43.37 million has been earmarked to finance the ongoing fabrication works of the Group's process equipment contracts mainly in Myanmar, Vietnam, Malaysia, Bahrain and Thailand.
   As such, the additional proceeds of RM33.63 million to be raised from the Proposed Private Placement has been earmarked to finance the other ongoing fabrication works of the Group's process equipment contracts mainly in Indonesia, Malaysia and Guyana, in the following manner:

No.		Details			RM'000
(i)	Purchase of raw materials and consumables such as steel plates used	22,960
		to fabricate the pressure vessels, fitting, forgings, electrodes for
		welding, sand blasting materials, industrial gas and related
		components for its fabrication works, and applicable import duties
(ii)	Payment to subcontractors and other suppliers engaged by KNM Group	5,000
		for performing fabrication and site works as well as related services
		in the process equipment contracts secured, such as project
		management fees, product certification fees, engineering design
		cost, non-destructive testing and other related services
(iii)	Payment of logistical expenses for shipping of raw materials and	5,671
		delivery of process equipment which includes port clearance charges,
		forwarding and shipping fees, transportation cost and other related
		costs
		Total		33,631

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