KUALA LUMPUR (Nov 9): The Italian government has rejected the proposed disposal by KNM Bhd’s wholly owned subsidiary KNM Europa BV of its entire stake in FBM Hudson Italiana SpA (FBM Hudson), its Bursa Malaysia filing showed on Thursday.

KNM said the buyer, the United Arab Emirates' Petro MAT FZCO, had failed to obtain the Golden Power clearance from the Italian government, according to a letter from the company dated Nov 7.

According to the International Assocation of Defense Counsel, the Italian government's Golden Power refers to its special power to stop any foreign direct investment, or halt corporate transactions involving strategic assets that include defence, national security, and infrastructure such as transportation, energy, and communications.

FBM Hudson is primarily involved in the design and manufacture of heat exchangers and high-pressure equipment for oil and gas, oil refining, petrochemicals, chemicals, power and fertiliser businesses.

“Presently, the management of KNM is reviewing and discussing with all the parties concerned for the steps moving forward. Further development in relation to the proposed disposal will be announced in due course,” it said.

In response to Bursa Malaysia's request for further information on the transaction, KNM said Petro MAT would try to secure the Golden Power clearance from the Italian government in order to proceed with the transaction as soon as possible.

In early September this year, KNM’s unit agreed to dispose of its entire stake in FBM Hudson for €22 million (RM111.76 million).

The proceeds from the disposal were intended to be used to pay off creditors of KNM or its subsidiary KNM Process Systems Sdn Bhd, under a scheme of arrangements announced by the group on Dec 16, 2022.

Following the share disposal, the group is expected to incur a loss on disposal of approximately €19.78 million (RM99.09 million).

According to the group's previous filing to the local bourse, as of June 30, 2023, FBM Hudson has a net asset value of €40.64 million (RM205.94 million).

KNM shares closed unchanged at nine sen, giving the group a market capitalisation of RM364.13 million.

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