KUALA LUMPUR (June 6): The Malaysian government, via the Minister of Finance Inc's 99.99%-owned unit GOVCO Holdings Bhd, plans to take up 1.25 billion new redeemable convertible cumulative preference shares (RCCPS) issued by Proton Holdings Bhd for RM1.25 billion, cash.
"The proposed RCCPS issuance will enable Proton to regularise its cashflow and settle the long outstanding balance payable to various local and international creditors, vendors and suppliers," DRB-Hicom Bhd, Proton's sole holding company, said in a bourse filing today.
The RCCPS carries a par value of 1 sen each and will be issued at an issue price of RM1, a premium of 99 sen to its par value.
GOVCO, in which the Federal Lands Commissioner holds one ordinary share, inked a conditional subscription agreement with Proton today to effect the share subscription proposal, subject to certain conditions precedent.
Notably, Proton must have obtained approval from its shareholders to increase its authorised share capital to facilitate the RCCPS issuance, besides having initiated and presented a restructuring/turnaround plan to the committee formed by the Malaysian government and led by the Performance Management and Delivery Unit (Pemandu) that will monitor the implementation of Proton's business recovery plan (task force).
"The said restructuring/turnaround plan will entail an outline plan on the relocation of the Shah Alam plant to the Tanjung Malim plant and a strategic plan for the expansion of business domestically and internationally," DRB-Hicom's filing read.
Proton must also provide the task force a list of identified vendors and the outstanding amount as of April 30 this year, it added.
As at the date of the subscription agreement today, the CPs have been fulfilled and the said agreement has become unconditional, it noted.
Under the agreement, Proton shall, within one year from today or such other date as may be mutually extended to, try its best "to seek and identify a strategic and renowned partner" who will assist in research and development to become a competitive player in the automotive industry at the international level.
Notwithstanding the aforesaid, in the event that Proton is not able to fulfil the aforesaid requirement, the parties shall discuss for alternative solutions or options towards achieving a similar objective, it noted.
A dividend of 4% shall be declared by Proton per annum on a cumulative basis for the RCCPS, which carries a conversion ratio of 1 unit of RCCPS to 1.152 units of Proton shares. The RCCPS will have a tenure of up to 15 years after the issuance date.
“On the assumption that PHB converts the entire 1.25 billion Proton’s RCCPS and the unpaid dividend declared for the PHB RCCPS of RM574 million into 2.1 billion new Proton’s shares at the end of the tenure based on the conversion ratio, DRB-HICOM’s shareholdings in PHB will be diluted from 100% to approximately 20.72% and DRB-HICOM will then cease to consolidate Proton Group’s financial statements. GOVCO will hold approximately 79.28% in Proton,” it added.
The proposed RCCPS issuance is expected to be completed by 7 June 2016.
DRB-Hicom's shares slid 4.5 sen or 4.97% to 86 sen at today's close, after 1.29 million shares were traded. The current price gives it a market capitalisation of RM1.66 billion.