28-12-2007: Proton unlikely to sell off Lotus, says Affin Research

KUALA LUMPUR: Proton Holdings Bhd is unlikely to sell off its 63.75% subsidiary Group Lotus Plc in the near to medium term, as Lotus is Proton’s technological arm that developed the Campro engine for all current and future models of Proton cars, Affin Investment Research said.

It said Proton had also signed an agreement to allow Youngman of China access to Lotus technology in return for a royalty fee, thus selling off Lotus might result in a breach of agreement.

Proton needed the Campro technology to operate independently, given the absence of a foreign strategic partner, it said in a commentary on a news report that an interested party had approached Proton for its stake in Lotus.

“However, everything ultimately boils down to the valuation and major shareholder Khazanah Nasional Bhd’s plan,” it said.

The research house has maintained its add rating on Proton with an unchanged target price of RM6.40 based on a price to net tangible assets (P/NTA) of 0.7 times. It is also maintaining its earnings forecast for Proton, pending further development.

“The interested party is reported to be also involved in the car-making and assembling business in Malaysia. We understand that local parties like Naza, DRB-Hicom and Mofaz Group, have in the recent past expressed their interest in Proton,” it said, noting that Proton had yet to confirm the report.

“We will be disappointed if Proton is to dispose off Lotus — being its key research and development arm, at this juncture in the absence of a strategic partner,” it added.

Proton's Lotus Completes Recapitalisation Exercise

KUALA LUMPUR, April 2 (Bernama) -- Proton Holdings Bhd's wholly-owned subsidiary, Lotus Group International Ltd and its subsidiary companies, Group Lotus plc and Lotus Cars Ltd completed their recapitalisation exercise last Friday.

In a statement to Bursa Malaysia today, the national car maker said the recapitalisation exercise, one of the elements in Lotus' business turnaround plan, was part of its continuous commitment towards Lotus.

A stronger balance sheet for Lotus Group is expected to follow the recapitalisation exercise which involved the capitalisation of certain inter-company advances of up to 45 million sterling pounds and a debt waiver of certain amounts owing by the Lotus Group to Proton and Perusahaan Otomobil Nasional Sdn Bhd of up to a maximum of 16.5 million pounds.

It also involved a capital reduction involving a 90 percent reduction in the par value of each existing ordinary share in Lotus, Group Lotus and Lotus Cars and the consolidation of the resultant shares on the basis of 10 ordinary shares into one ordinary share thereof.

The recapitalisation will also allow Lotus to execute its five-year business plan expeditiously, Proton said.

The exercise, however does not have any effect on the share capital and shareholding structure of Proton, nor will it have any effect on the net assets, gearing or earnings of the Proton group.

-- BERNAMA