Proton bails from failing motorbike group
BY NEIL MCDONALD | 29th Dec 2005
Although not confirmed, it is believed the buyer was a Genoa-based financing company, Gevi SpA, according to the Malaysian Star newspaper.
Proton had purchased the stake a year ago for Euro 70 million ($A114 million) while MV Agusta family Castiglioni retained a 37.5 per cent holding.
The MV Agusta brand is known worldwide as the "Ferrari of motorcycles".
Proton announced earlier this week that its wholly-owned subsidiary, Proton Capital Sdn Bhd, had entered into an agreement to sell that Agusta stake as part of its plan to focus on building and selling cars. It has embarked on an ambition plan to modernise its line-up with a new Satria three-door, Savvy five-door hatch and possibly a crossover all-wheel drive and large luxury sedan.
The sale may pave the way for a final agreement over a potential tie-up between Proton and Germany’s Volkswagen AG. Talks between Proton and VW have stalled in recent months over equity issues.
Proton had originally planned to expand the MV Agusta brand into a range of exotic sportscars.
"The proposed disposal is consistent with our direction of divesting non-core assets," Proton said in a statement. The eventual total loss from the Agusta move may never be known, as Proton is believed to have incurred other losses besides the acquisition cost, according to the newspaper.
Proton had reported in its latest quarterly results last month that its subsidiary Proton Cars UK Ltd, recorded a "substantial loss from doubtful debt allowances for advances to MV Agusta".
Under the terms of the agreement, Gevi will have to assume Agusta's sizeable "restructured frozen debts" of Euro 106.9 million. It was reported at the time of acquisition of the controlling stake that Agusta, established in 1978, was the most successful name in motorcycle road racing and had won more championships than any other motorcycle brand.
The national car maker posted a loss of 154.3 million Malaysian Ringgits ($A56 million) in its second quarter ended September 30, partly due to provisions for Agusta.
Proton said in a statement that the Agusta investment was fully written off, as directors believed the value of the investment was impaired.
It said earlier this week that the Agusta disposal is not expected to have any effect on its earnings or net assets.
The Malaysian company bought Agusta, which makes the Agusta, Cagiva and Husqvarna brands of motorcycles in December 2004.
The former Proton CEO, Tengku Tan Sri Mahaleel Tengku Ariff, said at that time that the purchase, similar with its acquisition of Lotus Group International, gave the group the engineering capability to develop a full range of transport products from motorcycles and watercraft to light aircraft and military vehicles.