PETALING JAYA: Conglomerate DRB-Hicom Bhd, which has businesses ranging from automotives to property development, has swiftly moved to deny rumours that the company is considering a full disposal of Proton Holdings Bhd to outside investors.
Responding to a report by a Malaysian business weekly last weekend, the group clarified that it remained committed to holding a substantial and strategic stake in Proton and remained confident of the carmaker’s turnaround.
“It must be highlighted that as part of the requirement of the RM1.5bil loan granted by the Government, Proton is currently undertaking a request for proposal exercise seeking a partner to Proton who can provide a strategic, operational and cultural fit on a permanent basis, with the intention of growing its automotive business. This exercise is expected to be completed in the first quarter of 2017 and its implementation is being overseen by the Task Force Committee formed by the Government to monitor the turnaround of Proton,” it said in a filing with the stock exchange.
The loan in question was provided to Proton as part of a conditional share subscription agreement that was announced in June as a cash injection for the loss-making carmaker.
Under the arrangement, the Government agreed to subscribe to 1.25 billion new redeemable convertible cumulative preference shares (RCCPS) at an issue price of RM1 each.
Should the RCCPS be fully converted, the Government will end up owning a 79.28% stake in Proton. This potential outcome could prove to be a stumbling block should DRB-Hicom choose to arrange a deal with outside investors.
As part of the RCCPS subscription agreement, Proton is currently seeking a strategic partner who will assist in research and development to restore its competitiveness in Malaysia’s automotive industry.
According to the agreement, parties involved in the agreement will seek alternative solutions should Proton be unable to find a partner by June next year.
