Proton's RM1.2b non-auto assets to be transferred to DRB-Hicom

PETALING JAYA: DRB-Hicom Bhd group managing director Datuk Seri Syed Faisal Albar said Proton Holding Bhd's non-auto assets worth at least RM1.2 billion will be transferred to DRB-Hicom, and subsequently pledged to the government as it relinquishes its conversion right to shares in Proton.

The non-auto assets include the Shah Alam land after the plant there is relocated to Tanjung Malim.

Recall that the government granted a soft loan of RM1.5 billion in the form of redeemable convertible cumulative preference shares (RCCPS) to Proton last year. If Proton does not pay back the loan, the government was to have the right to convert the RCCPS into Proton shares.

"The government wants the security of land and other assets (instead of the conversion right). So, the government is protected on the RM1.5 billion soft loan," Syed Faisal said, noting that the conversion right will now be transferred to DRB-Hicom.

In fact, he said the loan amount has been reduced to RM1.2 billion following DRB-Hicom's move to purchase the first tranche of RM300 million RCCPS from GOVCO, which is 99.99% owned by Minister of Finance Incorporated. The RCCPS are due on June 6, 2023.

In order to have a clean balance sheet for Proton, Syed Faisal said Proton will repay RM533 million of syndicated loans to local banks.

Proton will also settle RM567 million of shareholders' advances owing to DRB-Hicom.

Yesterday, Proton obtained the Finance Ministry's approval for the award of a research and development (R&D) reimbursement grant of RM1.1 billion against the RM3.7 billion applied.

On DRB-Hicom's part, Syed Faisal said the group will build a R&D test track worth RM180 million for Proton.