Wednesday, January 04, 2006

Son of € 70,000,000 ---> € 1

Remember my earlier posting on Just 1 Euro back for 70 million Euros where Proton said its 1 Euro sale of its motorcycle company, MV Agusta, bought one year ago for 70 million Euros, would not have any effect on its earnings. As one reader wrote in to suggest that I put it in numerals so we have a more acute idea of what the effect of the sale actually entailed, we would obtain a frightening € 70,000,000 ---> € 1.

Well, the 'Old Man' himself wants to know why Proton could say it won’t lose any money by selling MV Agusta for a mere € 1. In fact he said that the loss would be RM 315 million less the RM 4.50 Proton gets of the sale. Let me put that in numerals again, this time in ringgit as suggested by Dr Mahathir himself:

315,000,000 ---> 4½

Dr Mahathir said: "Assuming that this relieves Proton from paying the loss incurred by MV Agusta over the 15 months at Euro 26.87 million (RM131 million), it would still lose the purchase price of euro 70 million by selling off at one Euro."

Mahathir reminded the Proton management that once the sale was made, there is no longer any possibility of Proton ever turning the company around and regaining its purchase price, even if it can’t make a profit. This is apart from losing access to MV Agusta engineering technology, the Agusta name brand (which should be worth more than 1 lousy Euro), and assets in the form of two plants in Cassinetta and Morazzone, and stocks of motorcycles.

Yes sirree, the old man asked a few pertinent questions like:

(1) Who made the decision to sell?
(2) Who had offered to sell or buy the stake for one Euro?
(3) Whether there were other bidders?
(4) Whether there had been an attempt to get a higher price?
(5) Whether there had been an announcement on the sale?
(6) Whether Proton approached only one bidder, or more?
(7) If more, had the other bidders rejected the offer?

Yes, these are questions that we want answered too!

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