KUALA LUMPUR (April 26): Japan’s Kawasaki Heavy Industries, Ltd (KHI) has upped its stake in national motorcycle company Motosikal dan Enjin Nasional Sdn Bhd (Modenas), from 19% to 30%.

In a statement today, DRB-Hicom Bhd said it has entered into an agreement with KHI to sell an additional 14.3 million shares or an 11% stake in Modenas for RM40.3 million cash. DRB-Hicom holds the rest.

"KHI is also subscribing 52 million convertible preference shares (CPS) to be issued by Modenas. Once converted, KHI’s stake in the company will rise to 48%.

"The CPS will be convertible, subject to Modenas achieving strategic milestones agreed between the parties," it added.

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar believes KHI’s larger equity in Modenas means they will actively participate in the running of operations at Modenas, instead of merely being a shareholder.

“KHI has been a shareholder of Modenas from the inception of this brand. Even then, their products had helped Modenas chart a leading position in the domestic two-wheeler market.

"I believe it will augur a vibrant phase of customer-driven products for Modenas, especially in the street bike and sports bike segment,” Syed Faisal said.

He added that the existing relationship with KHI will enable both parties to work more efficiently, as they develop products for the local market, adding as well that the popularity of their key products in Malaysia will be a boost for Modenas.

Apart from bikes, Modenas also undertakes components machining for KHI. The production facility is located in Gurun, Kedah, and has a production capacity of 130,000 units annually.

DRB-Hicom shares fell three sen or 1.33% to close at RM2.22 today, for a market value of RM4.29 billion. Some 1.10 million shares were traded.