The Proton saga continues

Tan Chong Motor may be preparing to bid for national carmaker
PETALING JAYA: As the race for a stake in Proton Holdings Bhd heats up, a dark horse may appear in the form of Tan Chong Motor Holdings Bhd (TCM), which apparently is in the midst of drawing up a proposal to bid for the national carmaker.
According to AmResearch, TCM could soon be joining the race to acquire Khazanah Nasional Bhd's stake in Proton.
“Our
channel check suggests that TCM has been invited to submit a bid and it
is in the midst of drawing up a proposal,” it said in a report.
However, the brokerage's claims were not substantiated with any reliable
sources.
AmResearch said if TCM bid for an outright stake in
Proton, a general offer would likely strain TCM's financials. “As such,
we believe any outright stake acquisition will involve a joint bid,
which might possibly involve a politically well-connected party, given
TCM's lack of political clout compared to competing bidders,” it said.
[You must be registered and logged in to see this image.] Tan
Chong Motor’s assembly plant in Serendah. AmResearch says if Tan Chong
Motor bids for an outright stake in Proton, a general offer would likely
strain its financials.
When contacted by StarBiz, the de facto spokesperson for TCM, Edaran Tan Chong Motor Sdn Bhd executive director Datuk Dr Ang Bon Beng said: “We do not comment on speculations”.
AmResearch
said the best structure was for an asset specific bid, for example
Proton's Tanjung Malim plant rather than a general offer for an outright
stake.
It said TCM's Segambut land could significantly enhance
its gearing capacity, with an estimated RM400mil revaluation surplus and
assuming TCM undertook RM1bil in debt financing to acquire a 32% stake
in Proton at RM6 per share.
“If TCM succeeds in acquiring Proton,
we believe it may take some time before earnings improvement can be
realised, given the losses that Lotus is expected to incur over the next
24 months.
“We believe prospects of a turnaround largely hinge
on the speediness of Renault's new model introductions, though this is
difficult to quantify at this juncture,” it said.
TCM's
management has previously indicated plans to introduce one
completely-knocked-down Renault passenger model this year, which was
planned to be manufactured at TCM's Segambut plant.
It said
Nissan and Renault talks with Proton were not new because in 2009,
Proton was in talks with Renault for a strategic partnership but it fell
through in 2010. In the following year, talks with Nissan were
initiated and that, too, fell through.
“We understand (that the)
disagreement of Renault and Nissan's pricing of platforms, which were to
be used by Proton, led to failure of the talks. Renault has a minimal
manufacturing, distribution and research and development presence in
Asia and is hard-pressed to manufacture locally to compete with
aggressively expanding Volkswagen and Peugeot in Asean,” it said.
While Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh and DRB-HICOM Bhd
has stepped out to confirm their interest for the controlling block in
Proton, the rumour mill is still on overdrive, churning out more
speculations on the future of Proton.
TCM is the seventh party to be linked to Khazanah's divestment plan for Proton, while the Naza Group
and joint team businessman Sri Arumugam Apavoo Packiri and Gerald Lopez
of Genii Capital were also said to be vying for the national carmaker.
UMW Holdings Bhd and Sime Darby Bhd has since denied any interest in Proton after being linked to it. Proton's share price closed unchanged at RM5.25 yesterday.