Thursday, October 6, 2011

Bursa Securities raps KNM, fines directors RM200,000

KUALA LUMPUR: Bursa Malaysia Securities Bhd publicly reprimanded KNM GROUP BHD [] for breaching the Main Market Listing Requirements.

The regulator had on Thursday, Oct 6 also rapped and fined its directors a total of RM200,000 for not disclosing enough details about a proposed takeover in February 2010.

The regulator said KNM's announcement was 'not factual, unclear, inaccurate and lacked sufficient information and material facts to enable investors to make informed investment decisions'.

Bursa Securities fined managing director and major shareholder Lee Swee Eng and seven others RM25,000 each for breaching the listing requirements.

They were executive directors Gan Siew Liat, Chew Fook Sin and Ng Boon Su, independent non-executive directors Datuk Ab. Halim Mohyiddin and Lim Yu Tey.

Two former board members -- Dato' Mohamad Idris Mansor (resigned April 28, 2010 as independent non-executive chairman) and Lee Hui Leong (resigned on April 8, 2010 as executive director) ' were also fined.

Bursa Securities said the directors had breached paragraph 16.13(b) of the Main LR for permitting, knowingly or where they had reasonable means of obtaining such knowledge, KNM to commit the breach.

To recap, KNM had on Feb 4, 2010 announced BlueFire Capital Group Ltd (Bidco), a company controlled by Lee Swee Eng (who was a major KNM shareholder) about a proposal to acquire the KNM.

The proposed price was equivalent to RM0.90 per issued ordinary share of KNM.

However, Bursa Securities said the Fe 4, 2012 announcement did not disclose crucial facts which were contained in the Bidco offer letter.

Among them was that the proposed acquisition would be fully settled by ''redeemable convertible preference shares in a new entity and the RCPS can be converted into non-voting ordinary shares in Bidco or redeemed for cash.

Another condition which was not stated in the announcement to shareholders was there was not new shareholder holding 5% or more in KNM or existing shareholder increasing their shares by 5% or more; or more than 10 new shareholders holding 1% or more in KNM shares.

'The conditions which formed an integral part of the Proposal were clearly of interest and material to shareholders and investors to enable them to make an informed decision regarding the proposal,' it said.

Bursa Securities said the conditions were material to assess the reasonableness of the offer and certainty of the acceptance by KNM of the proposal.

Bursa Securities noted that KNM's share price and volume traded had increased following the announcement. KNM's share price rose from 75 sen to 81.5 sen on Feb 5, 2010 and the volume traded on that day was 142 million (3.5% of KNM's share capital) versus the past five-day average of 15.9 million shares traded.

The proposal subsequently lapsed on April 14, 2010.

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