DRB-Hicom’s Proton slams brakes on tie-up with Lotus, Goldstar

PETALING JAYA: DRB-Hicom Bhd’s 50.1% owned subsidiary Proton Holdings Bhd has dissolved its joint venture partnership with Lotus Group International Ltd and Goldstar Heavy Industrial Co Ltd, which was formed to sell and produce Lotus-branded vehicles, components, parts and accessories in China, following delays in obtaining a manufacturing licence.

The group’s board of directors said in a Bursa Malaysia filing yesterday that it had terminated its Equity Joint Venture Contract (EJV) with Goldstar and Lotus after its EJV company (EJVC) Goldstar Lotus Automobile Co Ltd (GLAC) failed to obtain a manufacturing licence within the stipulated time frame.

GLAC has not commenced its business operations due to the absence of a manufacturing licence.

The initial deadline to secure the manufacturing licence was set for Sept 25 last year but it was subsequently extended to Dec 31.

“Arising from the termination, the parties will consider and agree on the next course of action under the EJVC and in accordance with the laws of the People’s Republic of China,” the group’s board said on the fate of GLAC.

The two parties had entered into a EJVC on April 17, 2015 and the EJVC company was formed on Sept 25,2015, to produce and sell Lotus-branded passenger cars, engines, parts and components, and accessories and to provide after-sales services including spare parts.

The amount of issued and paid-up share capital of GLAC is 180 million yuan (RM110.3 million).

Proton held a 40% stake in GLAC, while Lotus held 10%. The remaining 50% was held by Goldstar.

The termination of the partnership is not expected to have material impact on the group’s earnings for the financial year ending March 31, 2018.

On Bursa Malaysia yesterday, DRBHicom gained 10.98% to close at RM2.73 with some 24.83million shares changing hands.