| Media |
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| Wednesday, March 29, 2006 |
| MV Agusta - The untold story - Proton reveals details behind Agusta deal |
New Straits Times
SHAH ALAM: Slowly but surely, a more complete picture of Proton’s controversial purchase of troubled Italian bike maker MV Agusta is emerging. And it is not a comforting picture.
For a start, the board of Proton Holdings Bhd was not aware of all the facts when it invested in Agusta. It did not know that some RM176 million in cash advances were needed to keep the company afloat, Proton chairman Datuk Azlan Hashim said.
Proton also got the short end of the stick in the deal as it could not exercise control despite having more than 50 per cent of the company, he said.
It turned out that the minority shareholders could veto key decisions, maintaining their stake even if fresh capital was pumped in by Proton. Also, Proton could not change the management at Agusta.
It was in August 2005 that the new management found out the full extent of Agusta’s troubles.
"We were first alerted when our Agusta representative asked for money. Clearly, we were caught by surprise," Azlan said at a Press conference at company headquarters in Shah Alam yesterday.
Former Proton chief executive officer Tengku Tan Sri Mahaleel Tengku Ariff could not be reached for comment. Calls to his mobile phone went unanswered.
The present board admitted that Agusta was a costly lesson but it was eager to move on.
"It would have been a drain on our resources. Our domestic market is challenged. I think that really is the real issue," said Proton managing director Syed Zainal Abidin Mohd Tahir.
Proton’s sale of Agusta drew criticism from Mahaleel and adviser and former prime minister Tun Mahathir Mohamad, who wanted Proton to explain the sale of the company for one euro and the rationale for the deal.
Proton provided this, and more, at the briefing.
Proton bought a controlling 57.75 per cent stake in Agusta for E70 million in 2004. The family-owned maker of premium bikes had debts of more than E231 million.
Agusta was losing money and "it has not achieved a single operating target", Azlan said.
The firm needed to sell some 44,000 bikes just to break even, but over the last six years, it has managed to sell an average of about 14,000 a year.
A six-month due diligence by PricewaterhouseCoopers and Societe Generale had highlighted these concerns.
"The management team of Proton at that point in time mitigated these concerns," Azlan said.
The past management made a E9 million cash advance to Agusta from Proton Cars UK Ltd while Perusahaan Otomobil Nasional Sdn Bhd arranged a E30 million facility for Agusta to buy parts.
"This was done without the knowledge of the board," Azlan said.
Agusta’s finances continued to deteriorate, with the remaining E107 million debt to be repaid and another E106 million needing to be pumped in to ensure a turnaround.
"The company was really in dire straits," Azlan said, adding that even its chief executive officer wanted to push it into bankruptcy.
Proton then hired Credit Suisse First Boston to review the situation and look for a buyer. It found two buyers, but GEVI SpA was the better option because it was taking over Agusta’s current and future liabilities.
A price higher than E1 could not be obtained as even banks had rejected loan applications using Agusta shares as collateral. This is because they viewed Agusta shares as worthless. |
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