Monday, September 3, 2007

Why we Sold MV Agusta for RM5

The government today defended its decision to sell MV Agusta Motors to Italy's Gevi SPA for a token sum of one euro (RM5). In a parliamentary written reply, Prime Minister Abdullah Ahmad Badawi said the sale was conducted only after a thorough study. "Among the things we took into account was Credit Suisse Boston's research which showed that Proton needed to sell its stake in MV Agusta," explained Abdullah, who is also finance minister. At that time, he added, Proton was going through financial hardship and could not afford to fund high-end motorcycle company Agusta. “Although Proton was the biggest shareholder in Agusta, it did not have full control over the management of the company," he said, adding that Proton's decision to sell off its stake to Gevi was right as Gevi had the financial capacity to continue funding Agusta.Proton had coughed up 70 million euros (RM330 million) for a 57.75 percent stake in MV Augusta three years ago. Abdullah was responding to a query from Teresa Kok (DAP-Seputeh), who had asked the finance minister to state the rationale behind Proton’s decision to sell Agusta for one euro to Gevi, since Gevi was purportedly able to sell one third of Agusta for 93 million euro (RM430 million).
She also wanted to know the identity of Gevi's board of directors and asked whether the government will set up a special commission to investigate the ‘mistake’ in Proton's transaction. PM denies report Abdullah explained that the rationale of Proton selling Agusta to Gevi was to allow the former to focus on its core business, manufacturing and marketing cars. "Thus, the decision to sell MV Agusta is the best choice for the company's operations and business," he said. Abdullah revealed that Gevi's principal is Allessandro Picollo, the former chairman of Agro Finance, a subsidiary to Banca Carige, an Italian finance and insurance company. The premier also denied that Gevi had sold one third of Agusta for 93 million euro.
"Proton has conducted a few researches to date, and we have not made any discovery to support the claim," he said. "Any question of transaction mistakes does not apply as Proton did not have any business relationship with Agusta when the sale was made," he added.Husqvarna, which was part of Agusta, is considered one of the most renowned motorcycle makers in the world and a leading supplier of sporty off-road superbikes.'Yet they paid 93 mil euros'Two weeks ago, former Proton chief executive Mahaleel Ariff told malaysiakini that BMW paid RM420 million to secure Husqvarna, which roughly makes up one-third of Agusta. This figure could not be independently verified by malaysiakini. He claimed that the remaining two brands - MV Agusta and Cagiva - and two factories belonging to Agusta was valued between 100 million to 150 million euro (RM470 million to RM700 million). Mahaleel said nothing had been done to increase the value of Agusta since Proton sold its stake as there were "no sales increase, no new products nor new patents". “Put it simply, it was worse off when it was sold to BMW and yet they paid 93 million euros... (the present Proton management) on the other hand, sold the whole thing - three factories, three brands - for just one euro,” lamented Mahaleel today.

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