According to a report published by British daily The Independent, Lotus owner DRB-Hicom is facing threats of legal action from a number of suppliers over non-payment of debts – said to total £23 million (RM113 million) – and has asked the Inland Revenue to delay tax payments to conserve cashflow.
The report said that DRB-Hicom was unavailable for comment, but sources close to the company said many of the outstanding issues – including payments to suppliers – relate to the previous management. They added that in some cases, the Malaysian company is challenging some of the arrangements with suppliers over previous contracts where there are quality control concerns.
However, they also said DRB-Hicom remains committed to the Hethel plant, its workforce and turning Lotus around into a self-reliant and global brand – DRB was reported to have rejected an offer to take the loss making sportscar maker off its books for £1. A final plan to make Lotus self-sufficient should be ready soon following due diligence work being carried out by consultants.
The British daily stated that according to the company’s internal financial results, which it managed to see, Lotus owes suppliers – which include ARM, Logica and OCS – up to £23 million (RM113 million) at 90 days overdue, and another £7 million (RM34 million) between 30 and 90 days.
“One petition has already been lodged with the company, and several others are outstanding. But the danger is that someone may sue for winding-up,” one person close to the group told the publication. Losses, the paper reports, are shown to be running at £23.6 million (RM116 million) – after exceptional items, interest and tax – for the last five months to August.
DRB-Hicom acquired Lotus following its takeover earlier this year of Proton, and DRB claims that £100 million (RM492 million) of its money has been invested in Lotus since the takeover.
Following a financial investigation of Lotus, DRB sacked then-chief executive Dany Bahar in June for alleged gross misconduct and appointed British-trained engineer Aslam Farikullah as COO. Bahar, as well as the heads of legal and human resources, are suing DRB for alleged wrongful dismissal and other matters.
The Independent adds that the situation is made all the more delicate because of the way the previous owners had a back-to-back guarantee with the banks based on its cash. Proton had agreed a £270 million loan with a syndicate of six banks to provide a massive expansion programme. Some £200 million (RM984 million) of the loan had been drawn down by the previous management, but a DRB spokesman said the new owners had hoped the rest of the money agreed with Lotus 18 months ago would soon be released.
Production of new Lotus cars has also suffered hiccups. According to the document, current and continued engineering delays to the Exige, its latest model, is now “severely impacting the whole business”, while the new Esprit has either been delayed or cancelled. Production was cancelled for a fortnight a few weeks ago. Ultimately, the paper reports, there are fears that DRB is stripping out some of the engineering technology and that the management still hopes to sell the business on to a Chinese owner.