KUALA LUMPUR (Dec 21): KNM Group Bhd has said it will enter into bilateral discussions with Credit Guarantee and Investment Facility (CGIF), instead of its Thai bondholders, to resolve its default in payment of the principal and interest on the bonds.

The group said CGIF, a trust fund managed by the Asian Development Bank, made payment of the principal of 2.78 billion baht (RM347.39 million), interest of 42.04 million baht (RM5.25 million) and accrued interest from Nov 18 to Dec 17 of 6.63 million baht (RM828,030), on behalf of KNM to Bank of Ayudhya, the Thai bondholders' representative, on Dec 15.

CGIF also issued a demand notice for immediate payment from KNM on the same day, the oil and gas group said in a bourse filing on Tuesday (Dec 21).

KNM said the demand notice requires the group to pay the principal and interest payment as well as interest on the principal and interest payment at a rate of interest equal to the indemnity interest rate of 5% per annum from Dec 17 until KNM makes full payment on the amount to CGIF.

An additional guarantee fee of the amount equal to 5% per annum calculated on the principal amount of 2.78 billion baht from Oct 27, 2021 until the end of the default period will also be payable by KNM to CGIF, according to the filing.

As of Dec 15, the additional guarantee fee accrued was 19.04 million baht (RM 2.38 million).

KNM is also liable to pay a total of US$103,328 for the costs and expenses incurred by CGIF as of Dec 15, the group said.

Based on calculation done on the back of an envelope, KNM is currently liable for 2.85 billion baht (RM356.39 million) before the 5% per annum interest and additional guarantee fee kick in.

KNM said it has also been requested by CGIF to submit a reimbursement plan within five business days from the date of the demand notice, which falls on Tuesday (Dec 21).

It is unclear how KNM plans to reimburse CGIF as no details were provided in Tuesday's bourse filing.

KNM missed principal and interest payment on Nov 18 due to challenges that arose from the Covid-19 pandemic and the unfavourable operating conditions of its Thailand-based subsidiary, Impress Ethanol Co Ltd.

Last month, KNM reported a net loss of RM32.51 million for the third quarter ended Sept 30, 2021, compared with a net profit of RM10.56 million in the immediate preceding quarter and a net profit of RM17.98 million in the corresponding quarter last year.

Shares of KNM closed unchanged at 14.5 sen on Tuesday, giving the group a market capitalisation of RM504.94 million.