Partner sought while Proton remains Malaysian

THURSDAY, SEPTEMBER 29, 2016
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PROTON Holdings Bhd will remain a Malaysian company with DRB-Hicom Bhd being its substantial shareholder, even as the owner of the national carmaker weighs its options on a foreign partner.

DRB-Hicom, which owns 100 per cent of Proton, had confirmed shortlisting five potential strategic partners in a government-imposed plan to turn around the loss-making carmaker and make it a global player.
“We’re seriously looking at the five parties, although we have received proposals from a number of players,” DRB-Hicom group managing director and Proton chairman Datuk Seri Syed Faisal Albar Syed Ali Rethza Albar said during the launch of Proton’s third-generation Saga here on Wednesday.
Syed Faisal said DRB-Hicom was “striving to close the deal” by the first quarter of next year.
The move to identify a partner was one of the conditions of the government’s RM1.25 billion (Bt10.5 billion) soft loan granted to Proton earlier this year.
“We are having deeper discussions to see what they have to offer and we are also looking at the potential of giving an equity stake,” he said.
Syed Faisal also clarified that DRB-Hicom would remain a substantial shareholder in Proton, despite reports claiming that DRB-Hicom was looking to dispose of up to a 51 per cent stake in Proton.
“DRB-Hicom will remain a substantial shareholder... without a doubt.”
The quantum of the stake would depend on what the potential strategic partner has to offer, according to Syed Faisal.
“We would like to see what they have to offer before deciding how much to sell.”
Syed Faisal said the selection of a partner would depend on strategic, operational and cultural fit.
It had been reported by Bloomberg that Proton had shortlisted Volkswagen AG’s Skoda |unit and Suzuki Motor Corp to sell a stake to.
It was also reported that Proton had chosen proposals from companies including Renault SA and Peugeot parent PSA Group.
Bloomberg reported that a 51 per cent stake would be sold in Proton, which also owns British sports carmaker Lotus Cars Ltd.
Other reports had also said that Lotus could be sold, depending on the offer DRB-Hicom would get for the sports car brand. Syed Faisal said the parties that had approached Proton were well-known companies.
“They are big and have a wide reach. They have their own DNA on how to do things. One of the questions we have posed is – can they help develop our local vendors?”
Proton has been losing market share year after year. According to statistics by the Malaysian Automotive Association, its market share dropped to 13 per cent on sales of 35,727 units in the first half of 2016, compared with a 15.6 per cent and 50,205 units sold in the previous corresponding period.
As of March 31 last year, Proton’s total long-term borrowings stood at RM 847million.
Proton is targeting to sell 100,000 cars this year, compared with 102,175 units in 2015.
Separately, Proton chief executive officer Ahmad Fuaad Kenali said the carmaker was targeting so sell 5,000 units per month of its newly-launched Saga.
He said the development cost for the new Saga was around RM 150million, adding that Proton expected to break even for the model within the next three years.
“With the previous Saga model, we could sell up to 8,000 units a month. But with the intense competition currently, we’re aiming for 5,000 units.”
Proton launched its new Persona model last month and the Perdana in June. Syed Faisal said Proton had received up to 10,000 bookings for the Persona.
The national carmaker is expected to launch a multi-purpose vehicle next month – the first product of the joint venture with Suzuki.