Mitsubishi sells shares in Proton

Mitsubishi sells shares in Proton

Agence France-Presse, Kuala Lumpur

Japan's Mitsubishi has sold shares representing 7.93 percent
of Malaysia's national car maker Proton to institutional funds,
an industry source said on Monday.

The 43.56 million shares were placed by investment bank CIMB
and snapped up mainly by local institutions, the source said.

"The shares were owned by Japan's Mitsubishi group and the
placedment was offered at a 5-10 percent discount to last
Friday's closing price of 9.80 ringgit (US$2.57)," the source
told financial newswire AFX-Asia.

Mitsubishi Motors and Mitsubishi Corp. had offered to sell
their collective 15.8 percent stake in Proton to its key
shareholder, Khazanah Nasional, but Khazanah turned it down while
pledging to keep control of the carmaker.

Proton was established in 1983 by Malaysian companies as well
as Mitsubishi Motors and some Mitsubishi group companies.

Mitsubishi's pullout could deal a blow to Proton, which is
grappling with poor sales due to intense foreign competition
ahead of market liberalization under the Association of Southeast
Asian Nations (ASEAN) Free Trade Area (AFTA).

Analysts said Mitsubishi's withdrawal, however, appears to be
a commercial decision to reorganize operations in Asia due to
financial troubles and did not reflect Proton's fundamentals.

Proton's market share tumbled to 49 percent last year from 60
percent in 2002, with its car sales falling 27.5 percent to
155,420 units last year.

Under AFTA, import tariffs for most products in the region
were cut to below five percent from last year. Malaysia obtained
a two-year reprieve for its auto industry until 2005 but it
recently said it would further defer reducing duties to the
required level until 2008.