The Wall Street Journal reported that if the government chose to fully convert the debt into shares, it could become Proton’s largest shareholder again.
Malaysia’s sovereign-wealth fund Khazanah Nasional Bhd sold its majority stake in the national car maker to Malaysian conglomerate DRB-Hicom for about USD412 million in 2012.
Proton has struggled to grow its share in an increasingly competitive domestic market and a gradual scaling back in import tariffs, said the report.
In a local stock exchange filing, DRB-Hicom said its unit had entered into a conditional agreement with Malaysia’s Ministry of Finance Inc’s Govco Holdings Bhd, which would take up to 1.25 billion new redeemable convertible cumulative preference shares, or RCCPS, issued by Proton.
The company said the RCCPS would have a par value of 1 sen and premium of 99 sen each at an issue price of 1 ringgit.
“The proposed RCCPS issuance will enable Proton Holdings Bhd to regularise its cash flow and settle the long outstanding balance payable to the Proton Holdings Bhd group’s various local and international creditors, vendors and suppliers,” DRB-Hicom said in the filing.
Under the agreement, Proton should try “to seek and identify a strategic and renowned partner” who will assist in research and development to become a competitive player in the global automotive industry, DRB-Hicom added.
DRB-Hicom reported in May a net loss of RM991.9 million for the year ended March 31, compared with a net profit of RM300.2 million a year earlier, mainly dragged by poor performance at Proton.
Shares of DRB-Hicom ended 4.97 per cent lower at 86 sen per share on Monday before the announcement, underperforming the local benchmark index’s 0.77 per cent rise, according to the WSJ report.