New Agusta deal leaves egg on Proton's face

By S JAYASANKARAN IN KUALA LUMPUR

THE management of national carmaker Proton may have erred disastrously by selling loss-making and indebted Italian motorcycle maker MV Agusta Spa for one euro back in 2005. Last month, the new owner of Agusta sold just one of its three brands to German carmaker BMW, allegedly for 93 million euros (S$192 million).
While it is clear that BMW did buy the Husqvarna brand from Gavi Spa, the mysterious Italian-registered company that bought Agusta in 2005, the pricing was never revealed. Still, a car industry executive told BT that the 93 million euro price tag was 'entirely possible'.
If true, the Agusta purchase would have been an enormously lucrative one for Gavi and will cast Proton's management in a dreadful light. The Agusta sell-off would also vindicate former prime minister and current Proton adviser Mahathir Mohamad who was bitterly critical of Proton's decision to sell the motorcycle maker.
In fact, the former premier was so angry about the sale that he even wrote a letter of complaint about the deal to the Securities Commission, the regulator of the markets. Nothing, however, came of it.
Proton, then under the stewardship of a Dr Mahathir favourite, Tengku Mahaleel Ariff, bought Agusta for 70 million euros (then roughly RM368 million or S$152 million) in December 2004. Even so, the deal also came with a substantial, although unspecified, amount of debt.
Agusta's financial position was quickly revealed in the carmaker's books subsequently. For the year to March 31, 2005, Proton wrote off the entire RM368 million it spent on Agusta. It subsequently made provisions of RM136 million relating to Agusta over the next three quarters.
In July 2005, Tengku Mahaleel stepped down after months of wrangling with shareholders and the government. Meanwhile, Dr Mahathir publicly criticised Proton's treatment of Tengku Mahaleel and refused to attend Proton meetings in his capacity as adviser.
Deprived of its two biggest supporters, Agusta didn't last long. Five months later, it was sold for less than RM5 to the mysterious Gavi which agreed to take on its debt estimated then at 60 million euros.
Proton has yet to comment on the matter but the revelations of Agusta's seemingly rich valuations of its brands are likely not only to hurt Proton's management but its primary shareholder, state-owned Khazanah Nasional, which supported Agusta's sale.
It will also embarrass Prime Minister Abdullah Ahmad Badawi who implicitly criticised his former boss, Dr Mahathir, by publicly going to Proton's defence. Nor is it likely to impress German carmaker Volkswagen AG which is on the verge of taking over the Malaysian
outfit.

tunku : azlan hashim and khairy jamaludin are the smartest,that's why they sold MV Agusta for 1 euro only. I wonder who really owns Gevi Spa?? If i had bought MV Agusta from proton, i will be multi millionaire by selling it to BMW. What's happening with our government, can't they see or they pretend to be blind.