KUALA LUMPUR (Oct 27): A unit of KNM Group Bhd, which carries RM1.6 billion in total cost of investment, has been slapped with a winding-up petition from a vendor over the failure to pay a settlement sum of US$8.5 million (RM40.08 million).

In a filing on Thursday (Oct 27), the process equipment manufacturer said its wholly-owned subsidiary KNM Process Systems Sdn Bhd (KNMPS) had on Wednesday (Oct 26) been served a winding-up petition from United Arab Emirates-based IPL Middle East DMCC.

The issuance of the petition pertains to an unpaid settlement sum of US$8.5 million pursuant to a settlement agreement entered into between the pair regarding KNMPS’ unpaid contract sums for freight forwarding and related services provided by IPL Middle East.

“KNMPS was unable to pay the settlement sum according to the payment plan, and consequently the petitioner (IPL Middle East) initiated this petition to wind up KNMPS,” KNM said.

KNM noted that the unit is not a major subsidiary of the company under the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Bhd.

“The company’s total cost of investment in KNMPS as at June 30, 2022, was RM1.63 billion,” the company added.

According to Bursa Securities’ MMLR, a major subsidiary is defined as an associated company or subsidiary which contributes 70% or more of the profit or total assets employed of the listed issuer on a consolidated basis.

“The petition is not expected to have any additional financial and operational impact [on] the group as the settlement has been provided in the group’s financial statements for the period ended June 30, 2022.

“KNMPS is seeking legal advice to resolve and/or defend against this matter,” KNM added.

KNM said the winding-up petition is fixed for case management on Thursday, and for hearing on Jan 19, 2023.

Shares of KNM ended half a sen or 5.26% higher at 10 sen, giving the company a market capitalisation of RM367.83 million.