Khazanah says made ‘modest gain’ from Proton sale

UPDATED @ 12:13:38 AM 19-01-2012

By Yow Hong Chieh

January 18, 2012

Critics of the deal contend that Khazanah will incur a loss by selling its assets at almost half of Proton’s book value. — Reuters pic

KUALA LUMPUR, Jan 18 — Khazanah Nasional has denied selling its shares in Proton Holdings Bhd for cheap, following claims it will incur a loss for disposing of its majority stake below cost.

Khazanah announced yesterday it would sell its 42.7 per cent stake in the national carmaker to DRB-Hicom Bhd via a conditional sale at RM5.50 per share, or RM1.29 billion cash.

Critics of the deal, however, contend that the state investment arm will incur a loss by selling its assets at almost half of Proton’s book value of RM9.81 per share.

Khazanah will also incur a real loss over the disposal after having acquired its stake in Proton for roughly RM8 per share.

“RM8.00 (per share) is not our cost. Our cost is significantly lower,” Khazanah managing director Tan Sri Azman Mokhtar told reporters here.

Khazanah managing director Tan Sri Azman Mokhtar also disclosed that there were more than three reasonably serious bids for Proton. — Picture by Jack Ooi

“We will book a gain from this one, a modest one... So we feel the divestment price was fair,” he said, noting that the holding cost was “somewhat lower” than RM5.50 per share.

Azman also disclosed that there were more than three reasonably serious bids for Proton, which he characterised as bids backed by full financing.

He stressed that Khazanah did not only look at the financial standing of the bidders but also their track record of good corporate governance and asset utilisation, which he said were more important criteria.

He added that Khazanah had conducted restricted bidding for Proton as it was “not your normal company” but one that had a key role to play in the realisation of the nation’s automotive policies.

DRB-Hicom said today its RM1.29 billion purchase of Khazanah’s stake in Proton will be mostly financed by Maybank.

DRB-Hicom group managing director Datuk Seri Mohd Khamil Jamil said 85 per cent of the funding will be from Maybank while 15 per cent will be from internally generated funds.

The diversified group, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, will also have to make a mandatory general offer for all remaining shares of Proton not owned by Khazanah worth RM1.73 billion in total.

Proton shares had been trading at a five-year average of RM3.95 before the counter began to climb from RM2.70 on November 14 to as high as RM5.46 last Thursday on rumours of Khazanah’s shares sale.