Holding company takes KraussMaffei Group private

By Karen Hanna 

A plan that restructures some of how KraussMaffei’s internal debt will be handled will result in the machinery maker’s removal from the Shanghai Stock Exchange in China. Brett Greenhalgh, the CFO of American subsidiary KraussMaffei Corp. (KMC) in Florence, Ky., who has been serving as interim president of the North American subsidiary since September, expressed optimism that the moves will put the company in a stronger position financially. 

Based in Parsdorf, Germany, KraussMaffei Group is owned by China National Chemical Equipment (CNCE) Luxembourg, which in turn is owned by KraussMaffei Co. Ltd. (KMCL). Above those companies is Sinochem, which acquired ChemChina in 2021, about five years after that company purchased KraussMaffei.  

KraussMaffei Group landed on the Shanghai Stock Exchange at the end of 2018 under the auspices of KMCL. 

At one time, Sinochem provided 478 million euro in loans — an amount that would currently translate to about $502 million.  

“These 400-plus million euro in loans are being transferred from a loan environment where they've loaned money to KraussMaffei and KraussMaffei must pay that back, to an environment where they've changed that loan into an equity stake,” Greenhalgh explained. “In that process, the KMCL entity that currently owns KraussMaffei is transferring that ownership to another Sinochem entity that is called CNCE Group Hong Kong.” 

As a result of the debt-to-equity swap, CNCE Luxembourg will no longer be owned by KMCL. Unlike KMCL, CNCE Group Hong Kong is not listed on a stock exchange, which will relieve KraussMaffei Group of publicly traded companies’ reporting obligations.  

In the future, CNCE Luxembourg will be 90.76 percent owned by CNCE Group. 

KMCL will change its name but continue to be listed on the stock exchange. 

The deal, first announced in August, is still underway. 

The moves won’t affect operations for KraussMaffei, or the support and technologies it offers its customers. However, Greenhalgh said it bodes well for the company and its future.      

“The thing that our customers may note is that the KraussMaffei balance sheet is stronger post this transaction than it was pre. So, they're not going to see anything different in terms of our behaviors and in terms of our customer service, in the terms of the quality of our machinery and so forth. But what they would see is an improvement in our balance-sheet positions that fosters a more healthy financial status,” he said. 

At a time when Greenhalgh said he believes machinery makers like KraussMaffei are struggling, the debt conversion signals Sinochem’s commitment to KraussMaffei Group, which makes extrusion, recycling, additive manufacturing and automation equipment. 

“I believe that this debt-equity swap shows a long-term and continued commitment of Sinochem to KraussMaffei, and it really bolsters our position, and it bolsters the relationship between KraussMaffei and Sinochem. It's something that I think is a very positive step, one that helps KraussMaffei participate in a very difficult market right now,” he said.