Fresh reports of the sale of the Malaysian government’s stake in car-maker Proton has cast a shadow over the expansion of British sports car specialist Lotus.
The value of stock in Proton has risen by fifty per cent in Kuala Lumpur trading this month, Bloomberg reports, on the speculation that control of the car-maker would be sold. Local Malaysian car industry heavyweight DRB-Hicom is favourite to acquire the majority holding.
But investment experts claim that, if the sale does go through, any new owner is likely to divest itself of Proton’s 64 per cent stake in Lotus Group International in order to raise capital with which to sure up Proton’s market share in its domestic Malaysian market, which is currently under threat – with Proton profits having fallen 76 per cent in the last quarter.
Bloomberg quotes two Kuala Lumpur investment advisors, Gan Eng Peng of HwangDBS Investment and Alexander Chia of RHB Capital, who both claim that the sale of Lotus would make sense for a new Proton owner. However, the sale could be fatal for Lotus if it means an end to the credit line that Lotus CEO Dany Bahar is relying on to facilitate his ambitious business plan to return Lotus to profitability by 2014. Bahar has recently been quoted that he believes, without the established support of Proton, Lotus “would not survive, end of story.”