DRB-Hicom may have fair grounds to defend against Proton-Goldstar-Lotus joint venture RM523m lawsuit

DRB-Hicom may have fair grounds to defend against Proton-Goldstar-Lotus joint venture RM523m lawsuit

According to a report by The Edge, DRB-Hicom may have fair grounds to defend itself against a civil suit served by Goldstar Heavy Industrial to Proton Automobiles China Ltd (PACL) amounting to RMB860.6 million (RM523 million at the time of the Bursa announcement).

As a recap, PACL is a wholly owned subsidiary of Perusahaan Otomobil Nasional Sdn Bhd (PONSB), which in turn is a 100% subsidiary of Proton Holdings Berhad (PHB) – DRB-Hicom currently owns a 50.1% stake in PHB.

The suit involves the termination of a contract between PHB, Lotus Group International Limited (LGIL) and Goldstar to establish a joint venture company named Goldstar Lotus Automobile (GLAC) to produce and sell Lotus cars, engines, parts, components and accessories in China.

However, after the JV company failed to obtain the required manufacturing licence within 24 months from the date of the JV’s business licence, the contract was cancelled on January 22 last year, resulting in GLAC being unable to commence its business. The deadline was originally set for September 25, 2017, which was then extended to December 31, 2017 – the extension was made out of good faith between the parties.

DRB-Hicom may have fair grounds to defend against Proton-Goldstar-Lotus joint venture RM523m lawsuit

The JV company’s inability to obtain the manufacturing licence within the stipulated time frame is one of the defences that is a viable to DRB-Hicom, as it is a condition precedent for the deal to proceed.

This lawsuit comes one year after the termination date, likely due to both parties being unable to reach a mutual agreement. Based on an earlier Bursa announcement dated April 27, 2015, upon termination of the JV, the parties could acquire the other’s party’s registered capital valued by an independent evaluator.

GLAC was incorporated on September 25, 2015, with the current amount of issued and paid-up capital listed at RM180 million – the registered shareholders of GLAC are PHB (40%), LGIL (10%) and Goldstar (50%).

If not exercised, Proton would be allowed to transfer its share of registered capital to a third party. Should both options not be carried out, the JV will then proceed to liquidate itself. As Lotus has already been sold off to Zhejiang Geely Holding (ZGH) Group by Proton in September 2017, the third option was the only viable one, hence the lawsuit to reclaim costs incurred by Goldstar.

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Gerard Lye

Originating from the corporate world with a background in finance and economics, Gerard’s strong love for cars led him to take the plunge into the automotive media industry. It was only then did he realise that there are more things to a car than just horsepower count.

 

Comments

  • Tangisan john Sambil Makan Roti john on Jan 28, 2019 at 11:24 am

    No need to defend la, let the game changing lawsuit finish Proton

    Like or Dislike: Thumb up 5 Thumb down 34
    • Of course lah you want Proton to close because the X70 is making you sleepless at nights due to poor sales. Don’t worry, Proton have good chance to win the lawsuit so you can bet the X50 will come later this year to finish your bullshitting, lying and trolling career.

      Like or Dislike: Thumb up 18 Thumb down 5
      • Thumbs up, bro!

        Like or Dislike: Thumb up 6 Thumb down 3
      • passion on Jan 28, 2019 at 3:18 pm

        Youngman Gen2 had strong sales then

        Like or Dislike: Thumb up 4 Thumb down 2
      • YB Kunta Kinte on Jan 28, 2019 at 3:48 pm

        It takes two hands to clap to make a sound. In this case, it looks like Proton did not honour their part. Otherwise, China Goldstar won’t simply sue

        I hope Proton and other GLC learn to honour their contracts. It is like marriage, you cannot simply cerai as and when you like.

        Like or Dislike: Thumb up 5 Thumb down 16
        • Ruslan Bahari on Jan 28, 2019 at 6:01 pm

          Have you ever heard a suspect say “I plead guilty” when he is charged? Of course not. Here, Goldstar just wants to force a settlement from PROTON, to recover some monies.

          Like or Dislike: Thumb up 6 Thumb down 0
        • Damon Lee on Jan 28, 2019 at 6:35 pm

          You really failed at reading, is it? “establish a joint venture company named Goldstar Lotus Automobile (GLAC) to produce and sell Lotus cars, engines, parts, components and accessories in China.

          However, after the JV company failed to obtain the required manufacturing licence within 24 months from the date of the JV’s business licence”

          Like or Dislike: Thumb up 5 Thumb down 0
        • Brian on Jan 29, 2019 at 1:40 am

          There is such thing as ‘divorce’ you noob. Clearly you never married before.

          Like or Dislike: Thumb up 5 Thumb down 0
    • The onus is on the husband (Goldstar) to stump up the downry (manufacturing license) for the future wife (Proton). If the husband fails to perform his obligation for marriage, then how is it the future wife’s fault?

      Like or Dislike: Thumb up 12 Thumb down 0
      • YB Kunta Kinte on Jan 28, 2019 at 3:49 pm

        Just like marriage, contracts too need to be respected. We cannot just rescind the contract sesuka hati

        Like or Dislike: Thumb up 4 Thumb down 8
        • Can! It’s call a DIVORCE. Applicable when one party (Goldstar) did not fulfill its duties to the future wife (Proton).

          Like or Dislike: Thumb up 5 Thumb down 0
        • Phaser on Jan 28, 2019 at 11:38 pm

          The JV company’s inability to obtain the manufacturing licence within the stipulated time frame is one of the defences that is a viable to DRB-Hicom, as it is a condition precedent for the deal to proceed.

          Which part is rescind the contract sesuka hati? They couldn’t get the license that is needed for the factory on time. So no deal la.

          Like or Dislike: Thumb up 4 Thumb down 0
  • panjang on Jan 28, 2019 at 11:33 am

    Aiyoh..like this os can ar?
    Meaning i can sue another party due to my inability?

    Like or Dislike: Thumb up 12 Thumb down 0
  • Susukotak on Jan 28, 2019 at 11:41 am

    Proton tak kesah pon. DRB-Hicom jual krete Suzuki, Audi, Mitsu, Chevy lg powerr profit majin,

    Like or Dislike: Thumb up 8 Thumb down 1
  • Abesla on Jan 28, 2019 at 12:41 pm

    Some has said The Edge can be trusted so would that means DRB-Hicom isn’t as guilty like others have assumed? Abesla the others credibility!

    Like or Dislike: Thumb up 4 Thumb down 0
  • fadzili Rahman on Jan 28, 2019 at 2:23 pm

    Its funny when I see these PROTON so called supporters talk about X70. that is a Chinese built Re-badge and there is no pride in it. it we talk about proton own cars them it makes sense. Since When Chinese cars made for third class nations make people sleepless?

    Like or Dislike: Thumb up 3 Thumb down 6
    • Just look at the amount of postings, self-replies and self-likings done by rival brands’ salesmen in the CRV vs XV vs X70 comparo to know that is true. They won’t be so desperate if the X70 is not doing well. And spare us the “the car is China-made, not Malaysian pride” talk. What use locally-made if Proton near bankrupt and no one is supporting.

      Like or Dislike: Thumb up 3 Thumb down 0
    • Phaser on Jan 28, 2019 at 11:44 pm

      Maybe you should go for a test drive before passing judgement. The Proton X70 offers Malaysian car buyers a product that is comparable to its world class competitors at a price they can afford. So is the consumer getting cheated or are they benefiting from it?

      Remember. 10 out of 10 people who bought hybrid cars when they were tax free did so because the cars were cheap. Nobody did it because they were environmentally aware.

      Like or Dislike: Thumb up 2 Thumb down 0
  • truthbringer on Jan 28, 2019 at 3:08 pm

    guys this is a blatant plagiarism of the “article” in the edge. Barely any work done to re-word. You also fail to mention that it wasn’t an article at all, but a lump-sum reproduction of an analyst report from a local bank. At some point you’ll need to adopt some basic journalistic practices.

    Like or Dislike: Thumb up 5 Thumb down 1
    • Phaser on Jan 28, 2019 at 11:45 pm

      100% correct. Quoting a source is not the same as copying and pasting their story.

      Like or Dislike: Thumb up 1 Thumb down 0
  • Amran on Jan 28, 2019 at 3:16 pm

    Buatlah sebelum Proton terkubur sepenuhnya..

    Like or Dislike: Thumb up 0 Thumb down 6
    • Itulah impian terbesar salesman2 jenama pesaing. Sungguh terdesak sehingga betapa rajin mereka sendiri post, sendiri reply dan sendiri like untuk memburukkan X70 dan Proton. Selagi Proton masih ada, selagi itulah mereka in takkan dapat tidur lena.

      Like or Dislike: Thumb up 7 Thumb down 0
 

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