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HI All,
This was posted on a Lotus group. This pertains to Proton, the present owners of Lotus.


Malaysia to buy back Proton stake from Mitsubishi

Reuters / February 20, 2004

KUALA LUMPUR -- Mitsubishi Motors Corp. is in talks to sell its stake in
Malaysian state-controlled automaker Proton back to the government as Proton
steps up its search for a new foreign partner to help it battle falling

A sale would mark an end to Mitsubishi's 19-year partnership with Proton,
the national car firm that makes a ubiquitous car modeled on Mitsubishi

A source close to Malaysia's state investment arm Khazanah Nasional told
Reuters on Friday the agency had been invited to buy Mitsubishi's stake in
Proton, but no decision had been reached.

"Khazanah was approached two to three weeks ago," said the source.

Mitsubishi, which is battling to revive its own car-making business, has
indicated Proton asked the Japanese carmaker to sell the stake back to the
government. Proton is looking for another partner to help it develop new

Mitsubishi Corp. and Mitsubishi Motors each have a 7.9 percent stake in
Proton. At current market prices, the stake is valued at around $219

A Mitsubishi Motors spokesman in Tokyo said no decision had been made on
whether the company was going to sell its stake.

But Mitsubishi Motors Chief Executive Rolf Eckrodt indicated this week that
Proton wanted out of the partnership.

Mitsubishi Motors, Japan's fourth-largest auto maker and owned 37 percent by
DaimlerChrysler AG, has been battered by loan control problems at its North
American finance unit.


"Now Proton thinks it can do it by itself, which is respectable. We are
going to develop our own sales network in Malaysia," Eckrodt told a news
conference in Tokyo on Thursday.

"We will have cooperation from Proton by sharing ideas, keeping in touch,
but the real partnership is over, defined by their (Proton's) strategy."

State-led Proton, a pet project of ex-Prime Minister Mahathir Mohamad, built
up a 60 percent share of the Malaysian passenger car market with the help of
two decades of tariff protection.

But it now controls just under half of the passenger car market after
foreign rivals such as Honda Motor Co., Toyota Motor Corp. and South Korea's
Hyundai Motor Co. slashed prices and won market share.

Last month Proton completed a corporate restructure and said it was in talks
to form strategic alliances with a couple of foreign carmakers. It cannot
afford the increasingly high costs of developing new models to compete with
giants such as Honda and Toyota and needs a development partner.

Proton recently unveiled its latest model, powered by its own Campro engine,
a move to cut costs as previous models using Mitsubishi engines required
royalty payments.

"Mitsubishi is probably under a lot of pressure with the Campro engine out,"
said Mohd Hasnul Ismar Mohd Ismail, general manager for TA Unit Trust
Management Bhd.

Data from Proton showed that it paid over 1.2 billion ringgit ($316 million)
to Mitsubishi Motors and Mitsubishi Corp in the year ended March 31, 2003.

Khazanah currently holds 30 percent of Proton and if it has more than 33
percent, it would have to buy the remaining Proton shares under Malaysian
securities law. However, companies can ask for a waiver of the rule.

If the takeover rule is triggered, the state agency would have to pay
another 2.83 billion ringgit to buy outstanding minority shareholdings in
Proton, based on the stock's closing price on Thursday.

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