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Tuesday May 29, 2012

Lotus is for keeps, DRB-Hicom and Proton to support its development

PETALING JAYA: DRB-Hicom Bhd said it would not be selling Group Lotus plc, dismissing fresh speculation of a potential sale of the loss-making subsidiary of Proton Holdings Bhd.

In a statement yesterday, DRB-Hicom managing director and Proton executive chairman Datuk Seri Mohd Khamil Jamil said the company acknowledged that Lotus could provide value to Proton.

“Lotus is an iconic brand with global presence and positioning, coupled with unsurpassed engineering expertise and a talented workforce,” he said.

Earlier this month, Khamil visited the Lotus facilities at Hethel in Norfolk, UK, and in conjunction with the visit, constructive meetings were held with South Norfolk Member of Parliament Richard Bacon and British business secretary Vince Cable. “They were both very supportive of our views and developments with regard to the future plans for Lotus. And subsequent to the meetings, the British government has agreed to consider reactivating the £10mil (RM49mil) Regional Growth Fund pledge to support Lotus' vehicle development plans in Norfolk,” he said.

He also said that both Proton and DRB-Hicom would continue to review the existing business plans and financial position of Lotus in taking it forward in the immediate to medium-term.

In March, the conglomerate has put in place a team comprising local and international consultants to Lotus to conduct an operations and legal audit on the Lotus group of companies.

The need for this review was pertinent in light of the financial obligation of Lotus in the form of a £270mil (RM1.3bil) syndicated loan taken at the end of 2010, for which Proton has given its corporate guarantee.

In March, Proton, in its third quarter results, noted that its subsidiary was in a technical breach of certain post drawdown covenants on its existing long-term loan. It has requested for an extension of time to fulfil the covenants and has submitted an appeal to the lenders.

For now, the loan amounting to RM1.01bil had been re-classified as a short-term loan as at Dec 31, until the receipt of approval for the extension of time.

In the statement, DRB-Hicom also confirmed that Lotus chief executive officer Dany Bahar has been temporarily suspended to facilitate an investigation into a complaint about his conduct made by DRB-Hicom. Bahar had said that the takeover of Proton by DRB-Hicom couldn't have come at a worse time but conceded that Proton was fully committed to the five-year business plan of Lotus to create jobs and to expand the factory.

In Bahar's absence, Khamil's men DRB-Hicom chief operating officer and Proton deputy CEO Datuk Lukman Ibrahim, DRB-Hicom head of investor relations Mohd Khalid Yusof and Hicom-Potenza Sports Cars Sdn Bhd CEO Aslam Farikullah have been authorised to handle and conduct the day-to-day management and affairs of Lotus.

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