I think Proton has some explaining to do. It sold MV Augusta for 1 euro after buying it for RM368 million. Now look at this – AP reports on 11 July the following:
Harley-Davidson Inc. said Friday it will buy Italian motorcycle maker MV Agusta Group for about $109 million to boost its presence in Europe, giving it entry into the popular performance bike market there.
And here’s a report from Bernama a couple of years ago.
Proton Defends Sale Of MV Agusta
KUALA LUMPUR, June 16 (Bernama) — 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.
– BERNAMA
Anil, you forgot
“Some months ago Husqvarna, a division of M.V. Agusta which manufactures scrambler sporty off-road motorcycles was sold to a German company, BMW for 90 million Euro (RM450 million). Now the rest of M.V. Agusta has been bought by Harley-Davidson Motor Cycles of the United States for RM350 million.
So Proton lost approximately RM800 million selling M.V. Agusta for RM5. The buyer invested one Euro and made 160 million Euro,”
(quote from chedet)
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Maybe the PM should form another Royal Commission to look into this blunder.
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[...] stumbled upon this report while browsing at Malaysiakini this [...]
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AHoo on July 15th, 2008 at 15.40pm:
This episode really stinks ! At the end of the day, it’s the rakyat money that got sucks real dry. Non in corridor of power would even shed a tear. It is just like in the share market where any buying or selling, the dealer’s gets a GOOD DEAL !
So, nothing new in this beloved country unless the regime (peceived by many to be corrupt) is change will there be any hope for our future generation. My take on mv augusta / proton is this : why buy a bike company when we can’t even get proton to take off well despite so much headstart ? If proton’s with so much protection can’t even built a decent car without problems, what is there to for the same peoples to qualify themselves to bring up another brand ( liability ) to turn around ?
In this perilious time where the poor are suffering by the day, the govt of the day still have the audacity of playing racial politics in the university and even in the NS training camp where the trainees are bombarded with their ideology. They are still enjoying the ” honeymoon ” after 8th March 08 election and thinking that time and tide will wait for them when the whole world is passing them by with every right thinking govts planning on how to save their country from the economic disaster that is already at our very doorstep.
Let brace up for in the coming months, hard times are ahead and this will likely be for the next 24 months !!! Thanks and continue to churn out more articles that challenges our thinking. !
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Hmm, it seems more people doesn’t understand the real situation.
BTW, it’s Agusta, not Augusta (notice only one ‘u’). Augusta is the famous American golf course.
I will copy and paste what I’ve written on Haris Ibrahim’s blog here:
As a motorcycling fan, especially motorcycle road-racing, I try to be in the ‘know’ of a few things in the motorcycle industry. And I know for a fact that MV Agusta is bad news in a financial sense.
When Tengku Mahaleel showed off that MV Agusta F4 bike with the Malaysian flag painted on the bodywork, I already knew Proton would be in trouble. MV Agusta was, and still is a company heavily in debt, and apparently the Europeans at that time have managed to snare an angel investor (more of an idiot investor) to try and save the sinking ship.
Malaysians keep pointing out how Proton sold off MV Agusta to that unknown Italian corporation Gevi SpA for the token sum of 1 Euro, but people (especially those aligned to TDM) tend to omit the fact that Proton basically saved themselves from paying back the huge sum of money that MV Agusta owed (more than 100 million Euros, depending on which source you are referring to).
In short, Tengku Mahaleel made a bad decision, and Proton ended up coughing more that 70 million Euros because of that bad decision. Forget about the potential of technology transfer, Proton owned Lotus Cars for almost ten year and so far they have gained very little in those terms.
Anyway, I found this piece of news last Friday. Apparently, Claudio Castiglioni, who was the original owner of the MV Agusta brand when he sold it to Proton, has now sold it to Harley Davidson Inc., that iconic American bike company. Now either Castiglioni bought it off Gevi SpA during the last few years or Gevi was actually Castiglioni’s front company, I don’t know.
Read the news here: http://www.superbikeplanet.com/2008/Jul/080711b.htm
More importantly, is the price which HD will pay for MV Agusta. In the article, it was mentioned that HD will pay approximately 70 million Euros ($109 million. Supposedly 45 million Euros ($70 million) of it is just to cover up the debts. In addition, the agreement provides for a contingent payment to Claudio Castiglioni in 2016, if certain financial targets are met.
What I’m trying to say is this: the Italians have managed to find yet another angel investor to cover up their bad decisions. When MV Agusta was sold to Proton, they managed to keep afloat with the help of then cash-rich Proton, long enough for them to buy it back at an attractive price, which is 1 Euro + around 109 million Euros of outstanding debt, something quite a lot of Malaysians doesn’t seem or want to understand. It was this very reason that Proton ended up being in the red after all these years of being in the black, in financial terms.
Incidentally, you have to at least admire the genius (Claudio Castiglioni) in finding people (more like suckers) to basically pay off his bad debts while still keeping control of his company. Oh, and getting a bonus too if his company finally turns a profit.
Go read other postings that support my write up here: http://harismibrahim.wordpress.com/2008/07/14/will-the-real-mv-augusta-please-stand/
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ken destino
other countries ahve alraedy found it the hard way.
its best governments dont dabble in business. tell me, which ventures have been successful except for monopolies. even the so-called success is at the expense of the rakyat via indirect taxes.
its even worse when the country is run by corrupts from BN. RM1 ,0 billion Free Trade Zone became RM4.7 billion. The Minsiters have the gall to tell us that the project is vaible when the revenue generated is nto even enough to pay the interest.
Heads on the chopping block for such fiasco? You must be kidding. the chief promoter gets promoted to ebcome the BBC Chairman. Malaysia Boleh
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do read another interesting view from our benar blog… and don’t forget to sign the memo if you haven’t yet.
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