The government has no intention of converting the RM1.25 billion redeemable convertible cumulative preference shares (RCCPS) in Proton Holdings Bhd into ordinary shares and is not taking over the national car maker.
In a statement, International Trade and Industry Minister Mustapa Mohamed, said the funding was part of the RM1.5 billion soft loan that was agreed to be awarded to the national car maker back in April 2016.
"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 ay its vendors," Mustapa said.
The statement was issued in response to speculation that such arrangement would ultimately mean that the RCCPS might be converted into ordinary shares, thus making the government the controlling shareholder in Proton with a 79.3 per cent stake.
Based on the subscription agreement signed between Govco Holdings Bhd and Proton, there were several terms and features of the RCCPS that were 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," he added. - Mkini
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