Ministry approves RM1.1b R&D reimbursement grant to Proton

PETALING JAYA: The Finance Ministry has approved the award of a research and development (R&D) reimbursement grant of RM1.1 billion to Proton Holdings Bhd’s wholly owned subsidiary Perusahaan Otomobil Nasional Sdn Bhd.
In a filing with Bursa Malaysia yesterday, DRB-Hicom said the reimbursement grant will be paid in a single lump-sum payment directly to Perusahaan Otomobil.
The grant will be disbursed upon completion of the definitive agreements relating to the entry of the proposed foreign strategic partner into Proton which was announced by DRB-Hicom on May 24, 2017.
Perusahaan Otomobil will use the grant proceeds to settle in full its syndicated loan facility to its lenders comprising mostly Malaysian banks. The current principal outstanding of the facility is about RM525 million and the total estimated accrued interest is RM8.3 million, assuming the disbursement date is Aug 28, 2017.
The remaining balance of the grant of about RM566.7 million will be used to help Proton to part settle and reduce the amounts owing from Proton to DRB-Hicom.
The award of the grant is the culmination of an extensive application process by Perusahaan Otomobil dating back to Aug 19, 2011 when it applied for reimbursement of R&D expenditure amounting to RM3.7 billion.
Meanwhile, DRB-Hicom said in a separate announcement that in order to prepare for the possible entry of a foreign strategic partner into Proton, it will purchase the first tranche of RM300 million redeemable convertible cumulative preference shares (RCCPS) from GOVCO Holdings Bhd, which is 99.99% owned by Minister of Finance Incorporated.
The RCCPS are due on June 6, 2023. This is part of the RM1.5 billion soft loan Proton received last year.
DRB-Hicom will also purchase the RCCPS dividend entitlement for the period ending June 6, 2017 amounting to RM50 million from GOVCO.
The RCCPS purchase will be financed through a combination of internally generated funds and bank borrowings.