China's Geely acquires 49.9-pct stake in Malaysia's carmaker Proton

Chinese Automaker Buys Stake in Malaysia's Proton

DRB Hicom-Geely partnership will drive Proton to success, says PM

"Whatever spending [we will make] will depend on what Proton will be, in terms of its long-term product planning [such as which market segments the company will enter]".

The partnership between DRB-Hicom Bhd and Geely Holding Group will take Proton to new levels of success and a secure future, said Prime Minister Datuk Seri Najib Razak.

"The acquisition is by no means a physical integration of assets but rather a collaboration to move forward the Proton and Lotus brands", Li Shufu, Geely's chairman, told a press conference.

Zhejiang Geely Holding Group has signed a final contract with DRB-Hicom Berhad, acquiring 49.9 percent shares of the Malaysian company's Proton and 51 percent shares of its sports vehicle brand Lotus, following a binding contract the two inked in late May. Proton was privatized in 2012 but its new owner, conglomerate DRB-HICOM Berhad, was unable to revive the carmaker.

Proton's stake in Lotus will be sold for 100 million pounds ($126.99 million) to Geely and a Malaysian firm, he said.

In the Malaysian auto market, which sells around 600,000 units per year, Proton sold only 72,000 units in 2016, giving it barely a 12 per cent share of the market, he said.

He also said DRB-Hicom would ensure that Proton would settle the syndicated loan of RM533 million to Malaysian banks. "We will work together to make the most of our respective strengths". DRB-Hicom said in a statement in February that it hopes an FSP can immediately increase the production capacity of Proton's manufacturing plant in Tanjung Malim, which now has a low utilization rate. It bought Volvo from Ford Motor 2010. The government has long resisted efforts to sell off any key stake in Proton, seen as a national icon. "We believe it will not be a long time (to turn around Proton) as we have confidence on Malaysian automotive market", he added.

Mr Najib hailed the merger, saying it will end "handouts from the government" for troubled Proton.

On the RM1.5 billion soft loan given by the government in June a year ago, Syed Faisal said, the government was expected to release the balance of RM250 million as the company had met the conditions set by the government's special task force with the signing of Geely as its strategic partner.

"DRB-Hicom will also be repaying RM350 million of the government's RM1.5 billion soft loan due in 2023 in advance, to help with Proton's reorganisation", he said.

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