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DRB-Hicom inks deal with China’s Geely

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar

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Written by Syndicated News

KUALA LUMPUR, June 23 2017 : The definitive agreement between DRB-Hicom Bhd and China’s Zhejiang Geely Holding Group (Geely) is worth RM460.3 million.

DRB-Hicom group managing director, Datuk Seri Syed Faisal Albar, said Geely would inject RM170.3 million in Proton and set up a sport utility vehicle or suburban utility vehicle (SUV) platform for Boyue with an implied value of RM290 million.

“Geely will also develop future models with Proton, bringing in the latest technology and research and development (R&D) programmes, and will be assembling Volvo cars if there is any excess capacity in the Tanjung Malim plant,” he said at a press conference after the signing of the definitive agreement here today.

Syed Faisal said Geely would share its management expertise and ensure that Proton’s R&D centres would be recognised as Geely’s global centre of excellence.

“Proton will also be the manufacturing hub for Geely’s right-hand drive models in the region, and local vendors would stand a chance to be on Geely’s global shared purchasing system if they meet the standards,” he said.

He said Proton would relocate its Shah Alam operations to Tanjung Malim, adding that DRB-Hicom would undertake the construction of a test track facility and a R&D test track for Proton at the new location.

On the RM1.5 billion soft loan given by the government in June last year, Syed Faisal said, the government was expected to release the balance of RM250 million as the company had met the conditions set by the government’s special task force with the signing of Geely as its strategic partner.

“The government will also reimburse RM1.1 billion to Proton for the amount it had spent on R&D to produce new cars, ” he said, adding that Proton had spent a total of RM3.5 billion in the past on R&D.

He also said DRB-Hicom would ensure that Proton would settle the syndicated loan of RM533 million to Malaysian banks.

“This is to ensure that Proton’s balance sheet is free from encumbrances, making it easier for Proton to execute its turnaround plans.

“Additionally, Proton will be paying back half of the shareholders’ advances which DRB-Hicom has been paying, which amounts to RM567 million of the total RM1.13 billion.

Meanwhile, on the asset that has been transferred out from Proton, Syed Faisal said, DRB-Hicom is pledging it back to the government, adding that if anything happened to Proton, the government could take the non-related car assets as they would be worth at least RM1.2 billion.

“DRB-Hicom will also be repaying RM350 million of the government’s RM1.5 billion soft loan due in 2023 in advance, to help with Proton’s reorganisation,” he said. – Bernama

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