In what appears to be an unending saga, Proton Holdings Bhd has again come out in defence of its sale of financially-troubled MV Agusta, reiterating that there were no synergies between the motorcycle maker and Proton as a car maker.
Describing continued criticisms over the sale and change in management announced by Proton in July 2005 as “uninformed speculation”, the national car company said there was “a refusal among some to acknowledge explanations provided earlier”.
Proton was obviously referring to its adviser and former Prime Minister Tun Dr Mahathir Mohamad and its former chief executive officer Tengku Tan Sri Mahaleel Tengku Ariff who have continued their criticisms over these matters.
“There were no operational, engineering, and technological synergies between Agusta and Proton. This has been independently confirmed by Proton’s appointed advisers. Proton manufactures cars for the masses while Agusta manufactures motorcycle,” the company said in a statement Friday.
The saga began to unfold on June 28, 2005, when Tengku Mahaleel, in an interview with a vernacular paper, complained that the government was not supporting Proton enough and that it was being treated unfairly.
His last salvo on the matter was at a press conference at his house in Damansara here on April 14, where he claimed that key questions raised by himself and Dr Mahathir have not been answered, among which was the loss that Proton, which bought MV Agusta for RM500 million, incurred when it sold its stake in the Italian company for one euro.
Proton bought a 57.75 percent stake in MV Agusta in December 2004 for 70 million euro (RM367.6 million).
The current management sold the stake to Italy’s GEVI Spa, which also assumed the motorcycle maker’s 107 million euro debt.
Proton said the entire purchase consideration of RM367.6 million was treated as goodwill and written off in the financial year ended March 31, 2005.
The additional provisions relating to MV Agusta in the accounts of the Proton group for the financial year ended March 31, 2006, amounted to RM136.2 million.
“In the event MV Agusta falls into bankruptcy, Proton would have been subjected to a contingent liability for an amount of up to RM923.1 million,” Proton said.
The company also reiterated that the decision to dispose the stake in MV Agusta was after careful consideration of the financial and operational implications to the Proton group, both in the immediate as well as the long term.
“The primary consideration was to minimise future potential losses for the group,” it said.
According to Proton, it wants to put the matter to rest as it needs to move forward to focus on its core business, which is designing, engineering, manufacturing and selling cars that appeal to the market.
“The key challenge now for Proton is to achieve real progress and advancement in this very competitive global automotive industry,” the company said.