Getting best performance out of Lotus

MAKING IT WORK: DRB-HICOM to review options for sports car maker upon completion of Proton deal


DRB-HICOM Bhd will review its options for Proton Holdings Bhd’s
UK sports car company Lotus once it completes the acquisition of the national carmaker.

“Until today, we have not been fully informed about the situation at Lotus. The options are to whip up and make Lotus work or they have to bear the consequences,” said DRB-HICOM group
managing director Datuk Mohd Khamil Jamil at the company’s extraordinary shareholders meeting (EGM) here yesterday.

At the EGM, 99.9 per cent of the shareholders voted in favour of the proposal to buy a 42.74 per cent stake in Proton and undertake a mandatory general offer for the shares it does not own in the national carmaker. The lone opposition was a
proxy vote from a shareholder who holds one lot of the company’s shares.



DRB-HICOM will buy the 42.74 per cent stake from Khazanah Nasional Bhd at RM5.50 a share, with the whole deal valuing Proton at RM3.02 billion.

DRB-HICOM will finance the purchase using internally generated funds (15 per cent), and the balance (85 per cent) through borrowings.

Shareholders were generally happy with the management team led by Mohd Khamil, having attended to their major grouses on the lack of interest in the company’s shares 18 months ago.

Since then, DRB-HICOM shares were up by more than 100 per cent to close at RM2.64 a share Mohd Khamil said the company was “concerned” about Lotus’ operations and would weigh its options, including a management change or an outright disposal of the sports car unit.

Last month, Business Times had reported that DRB-HICOM planned to undertake a full due diligence once the purchase was completed.

Since then, there has been suggestions that there could be a “hole” in Lotus. A popular blog had alleged that Lotus lenders, such as CIMB Bhd and Malayan Banking Bhd, had recently
stopped Lotus from drawing down the £70-odd million (about RM335.15 million) loan left from its £270 million (RM1.29 billion) loan.

Also, Proton has been suffering financially over the past few quarters, primarily because of higher expenses at Lotus.

Proton has been restructuring operations at Lotus Group International Ltd and spending heavily on branding to improve the performance of the British carmaker.

“Proton has to adopt to the culture of DRBHICOM.

We will go in and we will review. We have to be fair to Lotus. We have to see if its transformation plan is successful.

But looking from the outside, I am concerned about Lotus,”
said Mohd Khamil.

Proton suffered a net loss of RM88.2 million for the third quarter ended December 31, 2011, compared with a net loss of RM60.1 million in the same period a year ago.

Asked if there would be management changes in Proton, Mohd Khamil shot back: “What do you think, after paying so much (for
Proton)?”