Proton rules out new equity partner

Proton rules out new equity partner

KUALA LUMPUR (Reuters): Malaysia's biggest car maker Proton on Monday ruled out the possibility of selling a stake to another foreign car manufacturer, but said it was open to non-equity partnership.

"Clearly, if it is a function of equity, I think at this moment it is no longer on the cards," Proton chief executive officer Tengku Mahaleel Tengku Ariff told a news conference.

"But other than that, we are very open."

Japan's Mitsubishi Corp. and Mitsubishi Motors each own an 8.03 percent stake in Proton. Malaysian government agencies own a total of 43.56 percent.

Analysts say that Proton, formally known as Perusahaan Otomobil Nasional Bhd., needs a foreign partner who knows the business to help it shape up before protective tariffs against imports from Southeast Asian neighbors tumble in 2005.

Proton already had talks with major car makers on technology exchange, including DaimlerChrysler AG, Ford Motor Co and General Motors Corp.

At the news conference, Tengku Mahaleel also said he expected Proton to produce 202,000 units in the financial year 2000/01 (April/March), up from 184,000 units the previous financial year.

He also said Proton was ready to sign a new 10-year distribution deal with distributor EON, with whom it has had an exclusive arrangement in the past.

He said the new 10-year pact would replace a previous 10-year accord that lapsed in December 1999.

EON, which is also involved in banking, is 32 percent held by automotive firm DRB-Hicom. As part of an earlier restructuring plan to reduce debt, DRB was to sell its EON stake to Proton. That deal has since lapsed.

DRB had earlier sold its controlling 27.7 percent stake in Proton to state oil firm Petronas.

Tengku Mahaleel said that so far in the current year Proton production was already 16 percent ahead on the same time the previous year. He said that except for one model, the Satria, plants were at planned capacity.

Tengku Mahaleel said Proton would start assembling Proton cars in Indonesia this year. But the production volume and the models to be assembled had yet to be decided.