KraussMaffei Co. Ltd. and its shareholder, China Chemical Equipment Co. Ltd. (Sinochem), are planning a major asset restructuring that will see a debt-to-equity spinoff of the machinery business.
The deal is related to the wholly owned subsidiary China National Chemical Equipment (CNCE Luxembourg) S.à.r.l.
Sinochem has proposed converting a shareholder loan in the equipment subsidiary into equity. CNCE Luxembourg is the majority shareholder of KraussMaffei Technologies GmbH, a global supplier of injection molding, extrusion and reaction process equipment.
"This is very positive news for KraussMaffei as the debt-to-equity conversion will significantly improve KraussMaffei's capital structure and financial performance in the long run and underlines Sinochem's commitment to long-term support," Katharina Knaut, manager of corporate communications at KraussMaffei Technologies, said in an email
The debt-to-equity conversion will be executed by Shanghai-listed KraussMaffei Co. Ltd (KMCL) and is currently in the planning and review phase.
"Following the debt-to-equity conversion, CNCE Lux and KraussMaffei will remain one of Sinochem's most important overseas companies and will continue to enjoy its strong support," Knaut said.
An Aug. 1 filing with the Shanghai Stock Exchange said the transaction is still in the planning stage. Administrative measures, including an equipment audit and evaluation work, has not been completed, no agreements have been signed, and the transaction would require approval of shareholders, domestic and foreign regulators.
Also, the ratio of debt-to-equity swap and transaction price still need to be negotiated.
There is no certainty the transaction can be successfully completed, the Shanghai Stock Exchange announcement also says.
The company expects to disclose more detailed plans for the transaction within six months.
In the meantime, the relevant provisions of the trading company's shares are not suspended.
The restructuring announcement follows a management reshuffle at KraussMaffei that began earlier this year and continues with Chief Financial Officer Jörg Bremer leaving the company at his own request on July 31.
The machinery manufacturer appointed Thomas Giese as interim CFO. He specializes in that role for profit improvement and restructuring projects, according to his LinkedIn profile.
KraussMaffei posted losses of 2.77 billion Chinese yuan ($380.68 million) in 2023, according to that year's financial report. China National Chemical Corp. has owned KM since 2016.