Proton’s manufacturing unit intends to fully settle loan
KUALA LUMPUR: Proton Holdings Bhd’s manufacturing unit has received its research and development (R&D) reimbursement grant of RM1.1bil, which is the latest positive news for the loss-making national car maker.
In a statement to Bursa Malaysia yesterday, DRB-Hicom said Perusahaan Otomobil Nasional Sdn Bhd (PONSB) had received the reimbursement grant for the R&D activities in line with the Government’s policies.
“PONSB intends to fully settle its syndicated loan facility and thereafter help Proton to part settle its shareholders’ advance due to DRB-Hicom from the remaining funds of the R&D reimbursement grant of RM1.1bil,” it said.
DRB-Hicom had disposed of a 49.9% stake in Proton for RM460.3mil to China’s Zhejiang Geely Holding Group (Geely) under its move to rope in a strategic foreign partner to turn around the loss-making national car company. After the sale, DRB-Hicom now holds 50.1% of Proton.
In a separate filing with the exchange, DRB-Hicom said it had inked an asset exchange agreement with Govco Holdings Bhd on Thursday, in addition to a definitive agreement to buy the first tranche of RM300mil Proton redeemable convertible cumulative preference shares (RCCPS) held by Minister of Finance Inc’s 99.9%-owned subsidiary Govco.
The asset exchange agreement varied earlier-proposed terms, giving DRB-Hicom more flexibility in managing an asset pool to be created as a collateral for the Government’s remaining holding of RM1.2bil Proton RCCPS. This asset pool may comprise landed properties, designated shares and cash.
The collateral is provided in the event that Proton fails to redeem the RM1.2bil RCCPS.
Under the asset exchange deal, DRB-Hicom will be allowed to replace individual assets from the pool with other landed properties, designated shares and/or cash as well as to withdraw individual assets, as long as the asset pool’s market value is at least equal to the combined redemption value of the principal tranches of RCCPS held by Govco.
In its earlier announcement to Bursa (on June 22), DRB-Hicom said it had reached an agreement in principle with the Finance Ministry whereby, in the event of Proton’s non-redemption of Govco’s holding of RCCPS, Govco could direct DRB-Hicom to liquidate the identified assets and to pay it the proceeds of the liquidation plus any shortfall against the face value of the unredeemed RCCPS.
This requirement has been replaced. Instead, DRB-Hicom must inject more assets into the asset pool if the forced sale value of the asset pool is lower than the total redemption value of the principal tranches of RCCPS held by Govco as at Nov 30, 2030.
The asset pool’s market value should be 1.25 times that of the total redemption value of the Govco-held RCCPS.
Under the agreement, DRB-Hicom will also allow Govco to register private caveats on all the landed properties in the asset pool and will further ensure that there would be no encumbrance in transferring the asset pool to Govco in the event of an asset exchange.
Based on DRB-Hicom’s earlier announcement, the creation of the asset pool is expected to be completed in the first calendar quarter of 2018.