Govt to extend RM1.1b grant to DRB-HICOM unit

KUALA LUMPUR: The government has agreed to give a RM1.1 billion grant to DRB-HICOM Bhd’s unit Perusahaan Otomobil Nasional Sdn Bhd (PONSB).

DRB-HICOM yesterday said it had received a letter from the Finance Ministry on the award of a research and development (R&D) reimbursement grant for R&D activities by PONSB.

The grant represents the culmination of an extensive application process by PONSB on August 19 2011, amounted to about RM3.7 billion.

“The value of the R&D reimbursement grant is RM1.1 billion and is to be paid in a single lump sum directly to PONSB,” said DRB-HICOM in a filing with Bursa Malaysia yesterday.

The grant will be disbursed only upon completion of the definitive agreements relating to the entry of a foreign strategic partner into Proton Holdings Bhd announced on May 24 this year.

“There are no restrictions imposed on PONSB on the issue of the RM1.1 billion R&D reimbursement grant, as it is a reimbursement of R&D expenditure already expended,” it said.

The grant will be used by PONSB to reduce its financial liabilities.

“The de-leveraging process would enable both PONSB and Proton to be in a much stronger credit position to fund its future growth and expansion plans,” said DRB-HICOM.

It will also help PONSB to settle in full its syndicated loan facility of the current principal outstanding of RM525 million with a total estimated accrued interest of RM8.3 million.

A sum of RM566.7 million of the grant was to help Proton to partially settle and hence, reduce the amounts owing to DRB-HICOM. Ayisy Yusof