Minister of International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed has given his reassurance that the government has no intention of converting the RM1.25 billion redeemable convertible cumulative preference shares (RCCPS) in Proton Holdings Bhd into ordinary shares or of taking over the national carmaker.

According to Bernama, he said in a statement that the funding was part of the RM1.5 billion soft loan agreed to be awarded to the national carmaker back in April this year.

“Proton will remain a fully private company and its management will be fully responsible for its business decisions.

“The RCCPS with equity features is the fastest method to address Proton’s current financial problems since the company is in dire need of liquidity to pay its vendors,” he said.

This statement came after speculation that the RCCPS would ultimately be converted into ordinary shares, making the government the controlling stakeholder in Proton with a 79.3% stake.

On June 7, Proton Holdings Bhd had issued 1.25 billion new RCCPS for RM1 each to Govco Holdings Bhd, a company 99.99% owned by Ministry of Finance Inc.

DRB-Hicom, Proton’s holding company, had said the total subscription amount of RM1.25 billion would be utilised for the settlement of outstanding balances payable to Proton’s creditors, vendors and suppliers.

It said in a statement that the proposed RCCPS issuance will enable Proton to regularise its cashflow and settle the long outstanding balance payable to various local and international creditors, vendors and suppliers.

Based on the subscription agreement signed between Govco Holdings Bhd and Proton, there were several terms and features of the RCCPS punitive enough for Proton to convert into ordinary shares.

“The government hopes that Proton will be able to improve its financial results in the next five years.

“After a grace period of five years, Proton needs to pay the cumulative dividends (year 1-5) at four per cent per annum as well as the repayment of the RCCPS,” said Mustapa.



Comments

Use a Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook name, photo & other personal information you make public on Facebook will appear with your comment, and may be used on wemotor.com's media platforms. Learn more.