Tuesday, December 27, 2005

Just One Euro?

Proton announced they have divested it's stake in MV Augusta for a mere nominal fee of one euro in cash. Take into consideration that they paid 70 million euro for the 57.8% stake just over a year ago and you would understand why so many people are up in arms at the troubled national carmaker.

MV Augusta Now Belongs To Italian Company

KUALA LUMPUR, Dec 27 (Bernama) -- Proton Holdings Bhd announced Tuesday that its wholly-owned subsidiary, Proton Capital Sdn Bhd, has entered into a share purchase and investment agreement with GEVI S.p.A concerning its stake in motorcycle maker MV Augusta Motor S.p.A (MVA).

The agreement involved Proton Capital selling its entire equity of 57.75 million Class A shares, representing a 57.75 percent stake in Augusta, to GEVI.

Proton said in a statement that GEVI, an Italian investment holding company, would buy the shares for a cash consideration of one euro only.

"The proposed disposal is consistent with Proton's direction of divesting non-core assets," the national car company said.

It added that GEVI would assume Augusta's restructured frozen debts amounting to 106.94 million euro and working capital requirements of 32.50 million euro.

Proton also said that the proposed disposal of the stake was arrived at on a willing buyer willing seller basis after taking into consideration Augusta's unaudited financial results for the six months ended Sept 30, 2005.

The original cost of investment in Augusta was 70 million euro.

According to Proton, the proposed disposal is not expected to have any effect on its earnings, net assets, share capital or shareholdings.

There are so many questions left unanswered but the major one is why did they invest so much money in an ailing company in the first place and now discarding it off like toilet paper for a mere nominal fee of one euro? We were constantly reminded that Proton was a cash-rich company which didn't need handouts and bailouts from the Government but that still does not mean they have the right to put their money in unsound investments. They must not forget that the money actually comes from the Malaysian people whom makes up the bulk of their customers. Not only that, Malaysians have been paying a premium price for their inferior cars for years now. That money would have been more useful if it was used for R&D to improve their cars and lower the prices of their cars which is insanely high if you compare with other marques before they have been slapped the various levies and taxes. Is it any wonder that it is in the limelight for the wrong reasons and its sibling, Perodua is experiencing brisk sales at the moment?

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