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Proton Open To Options, Even Partner Taking Control

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PUTRAJAYA: Proton Holdings Bhd is prepared for any kind of strategic alliance with potential partners, including allowing them to have control over the manufacturer of the national car.

In giving itself a year to find the partner, Proton has described the task as something that is crucial for its turnaround.

Towards this end, Proton, now owned by DRB-Hicom Bhd, said that it had already been approached by a number of manufacturers for a tie-up.

According to Proton chief executive officer Datuk Ahmad Fuaad Kenali, the company is looking for a “deeper” strategic partner and would be working on an exercise to identify the most suitable company.

“We are giving ourselves a year to forge this strategic partnership.

“We are not ruling anything out. Strategic collaboration can be in any form. The lowest form can be the sharing of models to strategic alliances that involves equity, to the highest level where they may want to have control.

“It depends on what they bring to the table,” he told reporters after the unveiling of the new fourth-generation Perdana model by Prime Minister Datuk Seri Najib Tun Razak here yesterday.

On June 9, the Government gave financial assistance to Proton amounting to RM1.5bil. It included the Government subscribing for redeemable loan stocks amounting to RM1.25bil. As of March 31 last year, Proton’s total long-term borrowings stood at RM847mil.

The loan stock is convertible with cumulative dividends of 4% per annum in the next five years.

In giving the financial assistance, International Trade and Industry Minister Datuk Seri Mustapa Mohamed had said that the Government wanted the money back in five years and told Proton to look for a strategic partner.

Ahmad Fuaad said Proton had been working with Honda and Suzuki.

“We are working on the final details with Suzuki for a new model to be launched in October,” he said.

Meanwhile, DRB-Hicom group managing director Datuk Seri Syed Faisal Albar Syed Ali Rethza Albar said the prospective partner must be “a strategic, operational and cultural” fit into Proton’s needs.

“The RM1.5bil loan is predominantly to pay our vendors. With this assistance and strategic partnership plan in the pipeline, we are pretty confident of repaying the Government,” said Syed Faisal, who is also Proton chairman.

Proton had held talks with several global car companies, including Volkswagen and General Motors, but nothing had materialised.

In 2007, Proton then under the ownership of Khazanah Nasional Bhd, was approached by Volkswagen where it was willing to accept an equity offer not above 49% and inject funds but with a plan to increase its stake to 51% within a few years.

Last month, there were news reports speculating that Proton was in talks with two French companies – Groupe PSA (formerly known as PSA Peugeot Citroën) and Renault SA.

An industry expert also opined that the relocation of Proton’s Shah Alam plant to Tanjung Malim was not the best solution, as Proton currently needs half the production capacity of its Shah Alam plant.

Nevertheless, the new Perdana models mark Proton’s re-entry into the D-segment market with the 2.0 and 2.4 variants, featuring a sophisticated yet sporty executive sedan.

This new Perdana was developed via strategic collaboration with Honda Japan Ltd under the platform-sharing initiative and has been further enhanced by Proton in terms of the car’s handling and comfort.

The shares of DRB-Hicom jumped three sen or 3.33% to 93 sen at the end of trading yesterday.

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