Proton denies it plans to ditch Lotus

KUALA LUMPUR: The fate of Proton Holdings Bhd's loss-making Group Lotus International should be decided as soon as possible, analysts said.

Proton would be better off without the long under-performing British carmaker, they said, when commenting on the fresh rumours on the Lotus sale.

Top executives of both Proton and Lotus yesterday dismissed speculation that the ownership of the latter was about to change hands.

They acknowledged that the rumours were beginning to hit morale, especially at the national carmaker, as well as affect its sales and relationship with suppliers.

DRB-HICOM Bhd last month took control of Proton from Khazanah Nasional Bhd under a RM1.3 billion deal that is expected to be completed by the middle of next month.

This fuelled speculation that the new owner might seek to offload Lotus, which is midway through its ambitious plan to restore the brand's "Bond car" heyday by launching five new models.

"Our plan is to continue the business plan based on what we did before, unless the new shareholder comes in and tells us what to do next," said Proton managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir told the Financial Times on Sunday.

"So despite what you hear, of the rumours that the management is disposing of this or that... no decision has been made," he added.

Lotus chief executive Dany Bahar also denied a separate report that he was seeking funding for a management buy-out of the carmaker.

"Absolutely not. This is pure speculation," Bahar said.

Some analysts maintained that it was critical for Proton or its new owner to decide on Lotus' fate as soon as possible.

"I think Proton will be better off without Lotus," said an analyst from a foreign brokerage.

RHB Research considers Lotus to be low-hanging fruit, with its disposal both eliminating a RM250 million per annum drag on Proton's earnings and removing associated debt of RM900 million at a stroke.

Lotus, founded in 1948, was acquired by Proton in 1996.

So far, it has made a profit for Proton in just one year since the acquisition.

The British UK car maker sold only 2,000 cars last year.

Syed Zainal said in the Financial Times report that the sale rumours might be coming from parties who are interested in Lotus.

"There are several parties that are interested in Lotus. As to why they're stirring the pot, I don't know," he said. By Goh Thean Eu