Gm Set To Submit Bid Next Week For Proton

[Mark H]

GENERAL Motors Corp (GM), the world's biggest carmaker, plans to submit a bid for Proton Holdings Bhd next week, to meet an informal deadline for all proposals on the national carmaker to be in by the middle of this month, sources familiar with GM's operations here said yesterday.

 

Sources told Business Times that GM, or partners acting in concert with it, is prepared to offer as much as RM10 a share for Proton, provided the US carmaker is given control of the finances of Proton and manages its vendor system.

 

The offer is about RM20 lower than what the US carmaker was prepared to offer for a 30 per cent stake in Proton in 1998, another source said.

 

Proton at that time was the dominant player in the Malaysian car market, which is South-East Asia's largest passenger car market. Since then, its fortunes have come under pressure.

 

Perusahaan Otomobil Kedua Sdn Bhd (Perodua), the country's second national carmaker, has led vehicle registrations every month since at least March last year, the Malaysian Automotive Association said in October, while Proton's fiscal second quarter loss widened as sales sank to their lowest in seven years.

 

Proton's net loss was RM250.3 million in the three months to September 30 compared with a loss of RM154.3 million a year earlier.

 

Its cash shrank to RM410.53 million as at September 30 2006 from RM975.83 million in the previous corresponding period, its latest quarterly accounts showed.

 

At its peak in 2003, Proton had cash and cash equivalents of RM3.79 billion.

 

According to the second source, GM's interest in Proton is twofold: to participate with Group Lotus and to use Malaysia as a lower-cost centre to develop car parts for GM's plants worldwide.

 

GM has already committed to buy as much as US$1 billion (RM3.52 billion) of car parts from India from next year as it seeks to lower costs.

 

Proton acquired an 80 per cent controlling stake in Group Lotus in October 1996. The company produces high-performance sports cars and provides automotive engineering consultancy services.

 

 

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