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.
|Please help to support this blog if you can.
Read the commenting guidlelines for this blog.
do read another interesting view from our benar blog… and don’t forget to sign the memo if you haven’t yet.
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.… Read more »
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… Read more »
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… Read more »
Maybe the PM should form another Royal Commission to look into this blunder.
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)
I would just like to say that these gentlemen trusted with managing the countries wealth have been doing such a commendable job that they deserve whatever rewards they give themselves(both official and unofficial). And what rewards! On the official note, a friend just purchased an Audi at a dealership in … … and got access to information that Khazanah purchases luxury vehicles for it’s top officers. Allegedly an Audi Q7 (RM800,000.00 or thereabouts) among other cars in the range of RM300,000.00 – RM600,000 have been purchased for their top execs over the last few years. Man these guys know how… Read more »
Oh! and I forgot to give mention to our great Tun. What’s the holdup with investigating him? The many people now coming out bravely ready to face him in court should be enough for the powers that be to mount some kind of commission. If Malaysians were to vote on this at least 60-70% (those not hoodwinked) would vote for inquiry into his children’s dealings and other Malaysian “businessmen” who were close to him during his reign.
If Tun Mahathir and his lackey Mahaleel can’t count – Harley paid approx RM90 mil after absorbing debt of RM219 mil- then they should’nt have attempted to play around with Malaysia’s precious reserves in the billions. I would liken the past and present administration’s (mismanagement or) misapropriation of our funds – MAS, PROTON, PERWAJA, MARA, BRIDGES TO NOWHERE, DAMS, ….unfortunately the list goes on – to allowing (alleged) looters the keys to the Treasury. As with past instances of (alleged) theft like (alleged) kickbacks taken for purchases of MAS Aircraft there probably was money taken when MV Augusta was purchased… Read more »
B******* on your comment “As such, the decision to sell it at 1 euro was justified in my opinion.” Killer old chap. You do not be a savvy ( or even a moron of a) businessman to know that you do not sell a 300+ million investment for 1 euro. For that matter, have you ever wondered why or asked why, the BOD of proton did not care to offer MV Augusta – AT 1 Euro – to any other Malaysian companies or individuals first before so very suddenly selling it off to this mysterious company Gevi or whatever s***… Read more »
…….a sad reflection of the government appointed clowns in Khazanah. This bunch of village champions have no ability competing outside their home turf.
Leave the politics out of it. And look at from an economic angle. There is no justification in buying Agusta since Proton can’t even make good cars under Mahleel (though the ones made in last 2 years are of much better quality). At the point of selling, the Rm 300 M is a sunk cost. Also the agreement that Proton signed was so obviously in favour of Augusta that one wonder how this could have been accepted. The fact that the BOD of Proton was by-passed in this decision is another aspect that reflects badly on Mahleel. As such, the… Read more »
Tun Mahathir and Tengku Mahaleel have been vindicated!
So-called businessmen, they’re just playing with the rakyat’s money like it’s monopoly money.
I believe there are more mismanage of Rakyat money beside MV Augusta. These mismanage money are suppose to improve Rakyat basic needs and enjoying greater standard of living. It’s really really really suck ! Wish 70% of the eligible voters to wake up and vote PR in PRU13.
Have always believed that there is some real ship n the selling off of MV Augusta for 1 Euro. The Multi Million Dollar question is (is there a) MALYSIAN behind the company (Gevi Spa?) which bought mv Augusta for the miserable 1 Euro. (A) very close relative of (one of our dear leaders)? Any one wants to contribute towards the cost of a thorough investigation … (to find out who was) behind the Hellfire sale of mv Augusta????? Maybe I should do just that and then take bets on who is the devil behind the robbing us Malaysians further. The… Read more »
This doesn’t negate the fact that there was mass mis-management and bad decisions during the old mans time and systemic corruption through the legalized NEP programs (started by Razak and now we see it in Najib) in the name of uplifting the poor malay bumiputra. In the process some very priviledged Umnoputras have become billionaires with very little effort while the malay bumiputra is hood winked into believing that UMNO leaders are fighting for their cause by throwing some crumbs at them relatively when taken into a comparative perspective. Having said that, the new regime was no better; in fact… Read more »
Malaysians are not gripping on the desposal of the company. People are questioning the rationale of buying it for 368 millions and then giving it away just like that. It’s stupid to throw away millions into the drain and it reflect very badly on the ability of Proton’s management and business capabilities. Many Malaysian companies would love to buy it for millions but were never offered. The whole espisode stinks to high heaven. Somebody out there (could)’ve made millions in commission.
To sell any company at Euro 1 dollar after buing the company for RM300+ million is just a unlogical … Maybe when Proton buy MV Augusta, they have bought it at below market.. And maybe they have some information which is not available to the common market… Just imagine buying a house for RM200k, and suddenly because you cannot service the loan, you sell the house for RM1 dollar, it is really beyond comprehension… Well, in Malaysia, the problem is the lack of transperency in these type of dealings… It is very “disturbing” when a public listed company can really… Read more »
Not only that….In July 2007 MV Agusta Motor S.p.A, sold the Husqvarna motorcycle brand to BMW Motorrad for an undisclosed amount.????
There is no doubt this was a bad investent for Proton. But on the face of it, we have to buy their explanation that, faced with assuming further loans liabilities and capital injections of the order of several hundres of millions, and a lackof synergy with its car division, coupled with Protons ‘negative profits’, this was the most prudent course of action to take i.e. cut their ‘losses’ and stop the bleeding permanently. The key to unravelling the whole kaboodle is if some one could reveal if Gevi Spa is a genuine Italy company. Or whether it is owned by… Read more »
I believe another similar case in making … “Lotus” !! 🙂
Well done !! Keep up the good job. Good business judgement from proton. A company lead by … people.
Proton have wasted 367,999,999 malaysia tax payer money.
maybe the guy whom proton sold to did manage to turn around the company in one year & sold it. Mahaleel can c*** all he wants, but it is his decision to buy it at a high price and neglect to make the business work.