Screenshots

jeff,
- do you truly believe that the malaysian gov under whatever party or leadership will allow non-malaysian companies to buy, control and operate ktm or airasia, whether for rm1, €1 or rm10billion?
- do you truely believe your tm and/or dr.m will be able to buy over and run mv agusta, whether at rm1, €1, rm2 or whatever seemingly unreasonable sum, even if they truly want to?
- you seem to be quite the economist, will you buy av agusta at €1 if offered? why not?
- if you think €1 is such a good deal, perhaps you could enlighten us as to why khairy oxbridge didn't buy it?
- why don't you tell us if you truly believe or you are just being the devil's advocate? we don't want to shoot the innocents.

JEFF OOI says: You asked a hypothetical questions that has no place in a non-fiction world, but the issue is that there WERE indeed Malaysian parties willing to purchase MV Agusta for One Eoru, and naturally all liabilities on the book. However, the question here is on Khairy's general statement which is an oxymoron. Sadly, you have lost the plot. BTW, I am not en economist the way you have packaged me. I am just a Joe Public.

As I said before,it is not just Euro 1,that is sensation.

The total liabilities due to the bankers was about RM 1 billion,so the buying party had to obtain the banks' agreement.

I do not know whether TM has the back up of RM 1 billion,but I have no doubt that the rich chilren of TDM would have no problem with it.

And so I do believe.

If I correctly remember Tony Fernandes saying so, Tune Air bought over Air Asia for RM 1 + all debts/liabilities (ammounting to a few hundred million ringgit?).
So asset value taken over was less than debt taken over. Thus Tune Air pulled its weight and the rakyat didn't lose over the transaction. (Not sure of the KTM deal details to comment).

MV Agusta deal ripped off the rakyat - no doubt abt this!

Note that I don't care if it is a local or foreigner that takes over a M'sian company - just as long as we rakyat (taxpayers) are not made to pay for it!

JEFF OOI says: The record stays: Selling MV Agusta for One Eiro has cost the taxpayers at least RM500 million. Two, stripping MA Agusta's assets and liquidating its stocks would have garnered are revenue close to if not in excess of RM500 million -- if Tengku Mahaleel's calculation if any good, and we haven't heard of Proton refuting this trhus far. So, let's be patient when GEVI SpA makes the next move after grabbing MV Agusta for One Eiro. Are people behind GEVI SpA idiots that didn't know of the liabilities that they they inherited with the One Euro purchase? Or they know something that you don't know and SHOT themselves in thehead, business speaking?

We keep talking about how much the sale of MV cost us. But we don't talk about what it cost us to buy it in the first place.

If it was a bad decision in the first place, then the sale is a good one. We demonize the present govt/mgmt, but give the previous one buckets full of the benefit of the doubt.

I think the blame is on all of us. Who dared to speak up the last time?

Wake up. You and I are to blame for all these mess.

jeff, your solution (or should i say the solution of your trusted economic guru): "stripping MA Agusta's assets and liquidating its stocks" has no place in the non-fiction world (allow me to borrow your self-righteous phrase).
the facts are in the public domain and well known
- proton can't strip and sell the assets.
- it owned agusta share. not its management and control.
do you have more credible sources that say otherwise?
you have chosen not to believe proton's current management's explanation but imnsho, chose to believe in the person who is willing to stroke your ego, sit down with you and feed you bullshit.
anyone can say he is willing to buy agusta for a lot more than €1. it is your choice whether to believe him or not. until the deal is sealed all claims about who WERE willing to take over agusta's share from proton are not even worthy of being printed as fiction.
if the "most influential blogger in malaysia" can't differentiate what he's being fed, and pass on, he is going to be a great disservice to the country, despite all good intentions.

Fact is, until the mainstream media publish rebutals to Khairy's claims, he has the last word.

JeffOoi: "Many people hold the views that selling national assets at €1 to foreigners -- not to Malaysians -- is an act unpatriotic. Some say it borders on treason."

__________________

MV Augusta is an Italian company. Yes, formerly owned by Proton, but I would hardly call it a "national" asset as if it was founded and built by Malaysians. Lotus is still considered British even after all these years. And was it an act of treason by the British to allow companies like Guthrie and Sime Darby to be owned by Malaysians? And have you calculated the cost to the rakyat of keeping MV Augusta? Could we have afforded it?

Jeff,
I feel there is a dire need for a balanced and clearer view in this blog whenever it touches on Tengku Mahaleel and the MV Agusta saga. I can understand how you feel about Tengku Mahaleel, particularly when you’ve had the opportunity to sit with him for three days and found him utterly consistent or as one poster had mentioned previously: MESMERISED.

“In the case of MV Agusta, it was sold for €1 in 2005 -- without open tender and open bidding -- to GEVI Spa, a relatively obscure upstart.”

For those who feel it is important to know more about GEVI, it is an investment branch of the Genoa-based Carige Bank Group, something in the mould of the very famous Kohlberg Kravis Roberts & Co but obviously not as well known. KKR buys companies and usually turns them into big money winners by their restructuring expertise, including breaking up core assets to sell them separately. But you need unlimited capital and unique expertise and KKR have both in large measures. GEVI Spa is not really an upstart like the RM2 ones that are so prevalent in Malaysia. Source:(http://www.allbusiness.com/periodicals/article/1185386-1.html). I had found another source but I’ve since lost that.

Yes, GEVI will probably walk away one day with more than one Euro but this is what a global investment bank hired by Proton to review and advise it on its investment in had to say: (source :(http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_4439021b-cb73c03a-1f47ae80-de4ea175).

a. MVAM's existing business model is neither operationally nor financially sustainable.
b. Developing MVAM into an operating cashflow positive business will require:
(i) substantial backing from Proton;
(ii) over an extended period; and
(iii) will involve considerable financial risk.
c. Integration of MVAM's operations with those of PROTON is unlikely to deliver significant economies of scale or synergies to the combined business.
d. There is a very real possibility that MVAM will fall into bankruptcy, with significant commercial, financial and reputational risk to Proton.

I know The Edge has lost a lot of credibility for many Screenshot readers, especially following the Guna rant, but this link merely reproduces Proton’s verbiage.

Item (a) is most disturbing, don’t you think? Maybe Proton hired a dumb investment bank which happens to be good enough to go global.

“Apparently, there was no lack of Malaysians who were interested in buying over MV Agusta at €1, if they were offered. Dr Mahathir and Tengku Mahaleel, who are true-blood Malaysians, would have wanted to grab it for €1. In fact, Tengku Mahaleel told me he would double it to €2.”

For the record it is not just that one Euro. This is pure headline material. You know it of course.

For the sake of other readers then, under the deal, GEVI has to assume Euro 106.9 million in debts plus a further Euro 32.5 million in working capital requirements. Check out this source (http://news.motorcycle.com/article.motml?sid=3517), which has no axe to grind, and many other sources on the web. Or read Proton’s lengthy statement on the disposal of MVA in March 2006. Thus GEVI must take on a REAL DEBT of Euro 107 million and must pump in a further 32.5 million to keep the company working. Hopefully MVA will prosper and the profits will more than pay for this debt and the additional working capital requirements.

Proton wasn’t so sure and they ran like wild fire. Can we blame the Board given what the global investment bank had to say?

Yes, an open tender would be nice and I for one would have doubled the amount offered by Tengku Mahaleel if I have more than Euro 4, to be precise about Euro 139.4 million more (106.9 plus 32.5). But then I may not even want to touch it for half a Euro considering the fact that, in spite of the brand’s glorious past and its resurrection beginning in 1992 by the Castiglioni family, the company that Proton invested in was in serious financial difficulties. So bad that receivership proceedings had in fact begun for the company on 14 November, 2002. In mid-November 2004, MV Agusta issued a press release (via source: http://www.cyclenews.com/ShowStory.asp?HeadlineID=6890) to announce that the Varese District Court in Italy had ruled that the receivership proceedings were to be terminated given that the company had shown it is able to meet its commitments with an impending capital increase of Euro 70,000,000 before 31 December, 2004. The white knight that Claudio Castiglioni found was Proton. If one wonders why Proton had paid Euro 70 million for a company that might otherwise have gone under and thus be worth a lot less to the Castiglioni family, the answer lies in the fact that this was the sum needed to take MV Agusta out of the receivership proceedings. It was the proverbial “get out of jail free” card.

There was a loss provision of RM136.2 million in the accounts of Proton for the year ended 31 March, 2006 on top of the RM367.6 write off (the infamous Euro 70 million “goodwill” above). This was for the loans and advances extended via two subsidiaries within the PROTON Group (see paragraph 3.1.2 of statement). So the bottom began to fall off fairly soon after the Proton acquisition and more, at least Euro 32.5 million more, was needed.

NOW, DO WE REALLY WISH THE ABOVE ON A MALAYSIAN?

In answer to a poster: “Selling MV Agusta for One Eiro has cost the taxpayers at least RM500 million"

Yes, indeed but staying on meant having to pour in more money and if MVA went kaput Proton would have a further loss in the region of RM925 million (source: Proton). Remember what the global investment bank said.

“Two, stripping MA Agusta's assets and liquidating its stocks would have garnered are revenue close to if not in excess of RM500 million -- if Tengku Mahaleel's calculation if any good, and we haven't heard of Proton refuting this trhus far. So, let's be patient when GEVI SpA makes the next move after grabbing MV Agusta for One Eiro. Are people behind GEVI SpA idiots that didn't know of the liabilities that they they inherited with the One Euro purchase? Or they know something that you don't know and SHOT themselves in the head, business speaking?”

Like any thinking businessman, GEVI would not have stepped in if there is no likelihood of making a profit. I can’t help but feel that Proton had helped GEVI enormously in their decision to take over Proton’s investment because Proton had, essentially, already covered a very deep hole for them. Every Euro that Proton had put into MVA was for “hole-filling”; paying debts. The first Euro 70 million was spent to just get out of jail. Then there were further advances to the tune of RM136.2 million which were written off as irrecoverable. By nature auditors are a conservative lot, but when numbers are so large they must be careful that the write offs are justified. In a nutshell, GEVI’s risk is not as high as Proton’s. And they have the Euros that I don’t. But you know, sometimes they lose too.

So why did the Board divest when they have already sunk so much into MVA? I think the global investment bank’s findings left them with little choice and if MVA went under, there is hell to pay for many people. So the first rule of management applies; cover your ass.

Again “Two, stripping MA Agusta's assets and liquidating its stocks would have garnered are revenue close to if not in excess of RM500 million -- if Tengku Mahaleel's calculation if any good, and we haven't heard of Proton refuting this trhus far."

Are we to take Tengku Mahaleel’s words as gospel? Remember his attempt to spin the repayment of the loan that Proton had taken to invest in MVA as further cash out from the country? And the “never been told before” line? What does that say about TM? Does he have no sense of basic accounting or finance that any top CEO should have or did he see someone totally mesmerized? Secondly, if there is anything significant at all to be had, don’t you think a global investment banker would have spotted the gems in excess of RM500 million? Proton has probably said all it needs to say in its statements but people have not really bothered to read them carefully. These statements would have been vetted by lawyers and auditors for accuracy. I guess Proton should have issued a statement to say “nuts” at the very least.

Alas, the biggest beneficiary thus far is the Italian Claudio Castiglioni for a Malaysian-folly has gifted the family RM503.8 million thus far. Marble statues of the key Malaysians involved should rightfully adorn the palatial grounds of the Castiglioni estate.

Jeff, when is the much touted dialogue with Tengku Mahaleel? Anyway, here are some questions (which I’ve posted before) in case it will be held:

1. Why did Proton buy into MV Agusta? What was it that MV Agusta could have delivered to Proton that Mitsubishi did not or the Lotus group could not provide?
2. What were the factors that had caused MV Agusta to be in protracted financial difficulties so much so that receivership had begun two years before the purchase by Proton?
3. Did Proton and its financial and other advisers pause to reflect whether the business model of MV Agusta may be inherently unsound? Was Proton’s board aware that a lot more money needed to be pumped in to keep the company ticking?
4. Proton itself was facing so many difficulties at home after 20 years in the car business. What made it believe that it could solve the woes of MV Agusta, a business it has little or no knowledge.

JEFF OOI says: This reader's comment has been withheld by the TypeKey-generated filter as the sender has used a sign-in which is different from the one deposited with TypeKey, though the nick is the same. I have to labour to do a manual release.

Testing.

Jeff,
I feel there is a dire need for a balanced and clearer view in this blog whenever it touches on Tengku Mahaleel and the MV Agusta saga. I can understand how you feel about Tengku Mahaleel, particularly when you’ve had the opportunity to sit with him for three days and found him utterly consistent or as one poster had mentioned previously: MESMERISED.

“In the case of MV Agusta, it was sold for €1 in 2005 -- without open tender and open bidding -- to GEVI Spa, a relatively obscure upstart.”

For those who feel it is important to know more about GEVI, it is an investment branch of the Genoa-based Carige Bank Group, something in the mould of the very famous Kohlberg Kravis Roberts & Co but obviously not as well known. KKR buys companies and usually turns them into big money winners by their restructuring expertise, including breaking up core assets to sell them separately. But you need unlimited capital and unique expertise and KKR have both in large measures. GEVI Spa is not really an upstart like the RM2 ones that are so prevalent in Malaysia. Source:(http://www.allbusiness.com/periodicals/article/1185386-1.html). I had found another source but I’ve since lost that.

Yes, GEVI will probably walk away one day with more than one Euro but this is what a global investment bank hired by Proton to review and advise it on its investment in had to say: (source :(http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_4439021b-cb73c03a-1f47ae80-de4ea175).
a. MVAM's existing business model is neither operationally nor financially sustainable.
b. Developing MVAM into an operating cashflow positive business will require:
(i) substantial backing from Proton;
(ii) over an extended period; and
(iii) will involve considerable financial risk.
c. Integration of MVAM's operations with those of PROTON is unlikely to deliver significant economies of scale or synergies to the combined business.
d. There is a very real possibility that MVAM will fall into bankruptcy, with significant commercial, financial and reputational risk to Proton.

Item (a) is most disturbing, don’t you think? Maybe Proton hired a dumb investment bank which happens to be good enough to go global.

“Apparently, there was no lack of Malaysians who were interested in buying over MV Agusta at €1, if they were offered. Dr Mahathir and Tengku Mahaleel, who are true-blood Malaysians, would have wanted to grab it for €1. In fact, Tengku Mahaleel told me he would double it to €2.”

For the record it is not just that one Euro. This is pure headline material. You know it of course.

For the sake of other readers then, under the deal, GEVI has to assume Euro 106.9 million in debts plus a further Euro 32.5 million in working capital requirements. Check out this source (http://news.motorcycle.com/article.motml?sid=3517), which has no axe to grind, and many other sources on the web. Or read Proton’s lengthy statement on the disposal of MVA in March 2006. Thus GEVI must take on a REAL DEBT of Euro 107 million and must pump in a further 32.5 million to keep the company working. Hopefully MVA will prosper and the profits will more than pay for this debt and the additional working capital requirements. Proton wasn’t so sure and they ran like wild fire. Can we blame the Board given what the global investment bank had to say?

Yes, of course an open tender would be nice and I for one would have doubled the amount offered by Tengku Mahaleel if I have more than Euro 4, to be precise about Euro 139.4 million more (106.9 plus 32.5). But then I may not even want to touch it for half a Euro considering the fact that, in spite of the brand’s glorious past and its resurrection beginning in 1992 by the Castiglioni family, the company that Proton invested in was in serious financial difficulties. So bad that receivership proceedings had in fact begun for the company on 14 November, 2002. In mid-November 2004, MV Agusta issued a press release (via source: http://www.cyclenews.com/ShowStory.asp?HeadlineID=6890) to announce that the Varese District Court in Italy had ruled that the receivership proceedings were to be terminated given that the company had shown it is able to meet its commitments with an impending capital increase of Euro 70,000,000 before 31 December, 2004. The white knight that Claudio Castiglioni found was Proton. If one wonders why Proton had paid Euro 70 million for a company that might otherwise have gone under and thus be worth a lot less to the Castiglioni family, the answer lies in the fact that this was the sum needed to take MV Agusta out of the receivership proceedings. It was the proverbial “get out of jail free” card.

There was a further loss provision of RM136.2 million in the accounts of Proton for the year ended 31 March, 2006 on top of the RM367.6 write off (the infamous Euro 70 million “goodwill” above). This was for the loans and advances extended via two subsidiaries within the PROTON Group (see paragraph 3.1.2 of statement).

So the bottom began to fall off fairly soon after the Proton acquisition and more, at least Euro 32.5 million more, was needed.

NOW, DO WE REALLY WISH THE ABOVE ON A MALAYSIAN?

In answer to a poster: “Selling MV Agusta for One Eiro has cost the taxpayers at least RM500 million.

Yes, indeed but staying on meant having to pour in more money and if MVA went kaput Proton would have a further loss in the region of RM925 million (source: Proton). Remember what the global investment bank said.

“Two, stripping MA Agusta's assets and liquidating its stocks would have garnered are revenue close to if not in excess of RM500 million -- if Tengku Mahaleel's calculation if any good, and we haven't heard of Proton refuting this trhus far. So, let's be patient when GEVI SpA makes the next move after grabbing MV Agusta for One Eiro. Are people behind GEVI SpA idiots that didn't know of the liabilities that they they inherited with the One Euro purchase? Or they know something that you don't know and SHOT themselves in the head, business speaking?”

Like any thinking businessman, GEVI would not have stepped in if there is no likelihood of making a profit. I can’t help but feel that Proton had helped GEVI enormously in their decision to take over Proton’s investment because Proton had, essentially, already covered a very deep hole for them. Every Euro that Proton had put into MVA was for “hole-filling”; paying debts. The first Euro 70 million was spent to just get out of jail. Then there were further advances to the tune of RM136.2 million which were written off as irrecoverable. By nature auditors are a conservative lot, but when numbers are so large they must be careful that the write offs are justified. In a nutshell, GEVI’s risk is not as high as Proton’s. And they have the Euros that I don’t. But you know, sometimes they lose too.

So why did the Board divest when they have already sunk so much into MVA? I think the global investment bank’s findings left them with little choice and if MVA went under, there is hell to pay for many people. So the first rule of management applies; cover your ass.

Again “Two, stripping MA Agusta's assets and liquidating its stocks would have garnered are revenue close to if not in excess of RM500 million -- if Tengku Mahaleel's calculation if any good, and we haven't heard of Proton refuting this trhus far.
Are we to take Tengku Mahaleel’s words as gospel? Remember his attempt to spin the repayment of the loan that Proton had taken to invest in MVA as further cash out from the country? And the “never been told before” line? What does that say about TM? Does he have no sense of basic accounting or finance that any top CEO should have or did he see someone totally mesmerized? Secondly, if there is anything significant at all to be had, don’t you think a global investment banker would have spotted the gems in excess of RM500 million? Proton has probably said all it needs to say in its statements but people have not really bothered to read them carefully. These statements would have been vetted by lawyers and auditors for accuracy. I guess Proton should have issued a statement to say “nuts”.

GEVI still has to earn it. The biggest winner thus far is the Italian Claudio Castiglioni for a Malaysian-folly has gifted the family RM503.8 million thus far. Marble statues of the key Malaysians involved should rightfully adorn the palatial grounds of the Castiglioni estate.

Jeff, when is the much touted dialogue with Tengku Mahaleel? Anyway, here are some questions (which I’ve posted before) in case it will be held:
1. Why did Proton buy into MV Agusta? What was it that MV Agusta could have delivered to Proton that Mitsubishi did not or the Lotus group could not provide?
2. What were the factors that had caused MV Agusta to be in protracted financial difficulties so much so that receivership had begun two years before the purchase by Proton?
3. Did Proton and its financial and other advisers pause to reflect whether the business model of MV Agusta may be inherently unsound? Was Proton’s board aware that a lot more money needed to be pumped in to keep the company ticking?
4. Proton itself was facing so many difficulties at home after 20 years in the car business. What made it believe that it could solve the woes of MV Agusta, a business it has little or no knowledge.

This is the response I received when tried to post my comment on this topic:

"Thank you for commenting.

Your comment has been received and held for approval by the blog owner.

Return to the original entry"

Never happened to me before. Is this the general policy for everyone?

KJ has said his piece. He has made himself clear and his conscience is clear as far as he is concerned. Speaking of conscience, to some killing an ant is a grave sin, to some it is not. Just a matter of level of conscience u have. THe media has given him the platform but the media dare not probe further. Even I watch RTM channel "bersama Menteri", the questions asked were so lame and too easy for them to reply. What happened to gung-ho probings?

My response may be critical of you in certain areas but I think they are very fair. I hope you will release my posting and let others be the judge.

1 euro... big joke.

I willing to borrow money from loan shark and pay 10000x just to be the owner of Agusta...

banjaran,

what you talking? Indonesian worker built your house, so you bought it, is it your house or the Indonesian's house?

We are not talking about afford or what. We are talking why sell at 1 euro!!!!??? And why there is no open tender??? And who is the company which broker this deal!!!

agreed with jeffdaman

as much as air asia was born out of RM1 and a few million ringgits of debt ...

ppl don't just simply buy into an ailing company without the aim of reviving it and to turn it around

we are talking about billions being invested into MV Augusta but in less than 3-4 years, the company was being sold for 1 Euro ...

the tune to the issue is not whether the money should have been spent by Proton to buy or not as *nasi sudah jadi bubur*

my issue as much as other sane joe public is this :-

Forget about the proton / tengku maheleel / mahatir tag or whatsoever ...

For a company that has over RM8 billions in subsidies by the government over 20 years which has spent some billions to buy into a liability and without the idea as to how it can be sold for 1 Euro without poaching for the best deal, the fact is RM500 million was given *free* to Gevi SPA to buy into MV Augusta ...

In other words, the issue is how can the government be so stupid so as to SUBSIDISE Gevi SPA RM500 million when the latter buy into MV Augusta for RM1.

RM1 or 1 Euro is no big deal ... as far as I'm concerned, who is going to pay back the government RM500 million when some body decided to sell MV Augusta without calling out for a tender or acknowledging who could be the best bidder for this liability ...

the fact is if Proton has been stupid enough to buy into a *blackhole*, doesn't that make Gevi SPA an equal moron to buy into this liability ??? obviously when Gevi SPA buys into MV Augusta, no finance institution / management would approve the deal unless consent has been approved of ...

the other interesting issue that died down is if the government has to pay millions to gerbang perdana and with Samy's chest thumping that their inflated claim would not be entertained, the fact is that it boils down the the very issue in that some body's money would still have to be paid for compensation for wasted expenditure ...

lsk seems to miss the point...

the issue can be boiled down to the following question:
"was there any party, other than GEVI SpA, preferably malaysian, that was willing to buy MV Augusta, assuming the consequences (liabilities, etc) of such purchase, for 1 Euro, or even more???"

the answer:
WE WILL NEVER KNOW!!! the proton management decided to keep everything secret until the sale of MV Augusta to GEVI SpA was already concluded. NO PRIOR ANNOUNCEMENT! NO OPEN TENDER!

now, tun mahaleel is saying that there would have been other parties willing to pay more for MV Augusta. stupid proton management made sure we will never know if that is true. now, lsk, who are you to say that tun mahaleel is bullshitting???

Jeff
I have been following the opinions here with great interest.
However, I noticed that blogger birdeye has mentioned that one of his
posting to this blog is MISSING !!??
Please tell us why it is not published by you ?

Jeff,

I can see that you are all out here to champion your 'mentor' - Tun Dr Mahathir.

JEFF OOI says: "Mentor"? Sice when you became a fiction writer?

I am also a Joe Public, but your no-nonsense backing up of Dr Mahathir is very obvious and baffling. I am not supporting anyone, but TDM is pictured here as the savior no-matter-what, and this sounds fishy to me. Make no mistaken, the same rule apply to Pak Lah's idolizer. Simple isn't it?

However, here are points to ponder:-
1) I have a belief that if MV Augusta not sold at 1 EURO and Proton would incur huge losses as recorded in P&L, all hell is still breaking loose here and the complaint would be of non competent Proton's board of director.

2) The recent PWC report on Proton should be taken as the ultimate 'truth' - if TDM's version contains 'more truth' - I have nothing else to say.

3) Accept it - Proton in the past is a failure. Proton must be playing at the same level with others, and if Proton's history is to be scrutinized, THIS IS IMPOSSIBLE UNDER MAHATHIR'S TENURE. Proton must act fast enough so it is much more competitive, and this is being done right on the track under Pak Lah's administration.

And also to be fair, I have a few other comments:-

1) I dont have a good feeling with KJ. KJ is doing damage to Pak Lah no matter what has been said. Honestly, I have no idea what is going on in the back.

2) If you are a Joe Public, you should have taken the advice from experts - eg you fell sick and went to clinic, asking doctor's advice. The same thing goes with Proton. Dont say that you are a Joe public, but refusing to believe others eg PWC's report - this is a clear contradiction.

3) Some people here think that 1 EURO is cheap, yes 1 EURO alone is cheap. But the moment you are taking it over (with 1 EURO), you are liable for hundreds of millions Euro debt and should now I continue asking, '1 EURO is that cheap eh?'.

fairplay,

My posting in this blog on this topic which has still not seen the light of day is available at Rocky's Bru (http://rockybru.blogspot.com)under the banner "NEVER FOR ONE EURO, BOY".

I think Jeff is simply too busy to review my posting. If this posting gets through, there must be some form of filter installed to block certain postings until they are read by Jeff.

I was offended when I saw what KJ mentioned about Pantai. He said check who sold it to a non malay. well KJ we know who sold it. But was the non Malay a Malaysian??? who has been selling it to non Malaysians? well since you play this racial games..well who sold it to a jew.

Guess it is not okay for a non Malay Malaysian to own companies but ok for foreigners? come of it KJ. we may not be oxford but we are not stupid. and yeah you got a loan. How come they can give you a loan for millions?

Anku tak faham apa si khairy cakap? Bapak Mertua kau cakap Hang sudah tiada kerja atau pegang jawatan kat Tingkat 4 sudah cukup Hang tipu rakyat yang Hang tak kerja kat sana. Siapa yang bodoh ini, Hang atau bapak Mertua? Kau itu cukup penipu, pandai main mulut, pandai macam samy Vellu or Leong Sik ambil kekayaan cepat. Sampai bila kita nak diperbodohkan lagi. Pemuda UMNO harus singkir Hang dari UMNO. Kita tak mahu Hang!

Saya pun nak beli Augusta. Kasi Euro3, dan jual pada Mahathir Euro4, untung lah saya Euro1. Tak ada common sense pasal niaga.

Are you think before that air asia is going perform better than MAS when they brought over from DRM Hicom? Proton should sell MV agusta since they can't turn it to profit from loss. But, the question here is how come there is no open tender and open bidder? No body will know here, there could or possibility one of malaysian might taking over MV Agusta and make it profitable if proton would ike to open tender when the time sold it to foreigner. Air Asia is always good example malaysian ability (blue ocean).

bird eye has posted a query on rocky's blog as follows :-

"Jefff, when is the much touted dialogue with Tengku Mahaleel? Anyway, here are some questions (which I’ve posted before) in case it will be held:

1. Why did Proton buy into MV Agusta? What was it that MV Agusta could have delivered to Proton that Mitsubishi did not or the Lotus group could not provide?

2. What were the factors that had caused MV Agusta to be in protracted financial difficulties so much so that receivership had begun two years before the purchase by Proton?

3. Did Proton and its financial and other advisers pause to reflect whether the business model of MV Agusta may be inherently unsound? Was Proton’s board aware that a lot more money needed to be pumped in to keep the company ticking?

4. Proton itself was facing so many difficulties at home after 20 years in the car business. What made it believe that it could solve the woes of MV Agusta, a business it has little or no knowledge."

To birdeye's :- good point, whynot aim these questions and SHOOT THEM to Tengku Mahaleel himself ? I'm sure Jeff would not mind giving the benefit of doubt to your query's ...

But setting this aside, Joe's Public money as per your posting still needs accountability - RM500 was being used to subsidised - the proverbial "Out of Jail" card that was given to MV Augusta to stay of the receivership ...

If Gevi SPA can make them turn around by buying it for a value of 1 Euro, why not make them pay back RM500 million ?

write of those RM100+ millions for bad investment made ok - but RM500 million is not a small amount ...

thus, the government/board of Proton should be asking MV Augusta's new owner RM500 million + 1 Euro ...

Secondly, if PWC can come out with a report saying that the current board could pursue legal action against the old board - have they dwelved into the fact that the current board should also be responsible for selling MVA for 1 Euro whilst not answering or accountable as to why RM500 million need not be paid by Gevi SPA ???

During Tun's era, were there any open tender for projects or takeover of government-owned companies? May someone enlighten us?

I've read ur comment birdseye and i think i gained a lot of info from that 1... there shud be more of u in here i think...

Anyway, ur comment appeared to be too long n i guess, typekey *maybe* has this sort of filter for long comment or somethin and needs to be approved first... but thats just my guess... some commenting services have done that...

Yeah i share ur first question at exactly the same time i've read about this whole 1 euro thing... why did Proton buy MVA? it is not the some as buying a keropok from a grocery store...

It really doesnt make any sense... buying a dying company n selling it cheap later... paying millions for nothing... how i wish Proton wud say "Yeah we screwed up big time... for the compensation to taxpayers, we cutting 50% off for a Proton car"

That will be a NO in Bolehland

eh, don't let a damn good debate die lah...

many here asked why proton didn't call for open bids before selling its mv agusta shares for 1 euro.... fair enough question from joe publics, i guess.
i wonder, did dr.m called for open bid before selling airasia for rm1....? if not, why not? i mean airasia big money making machine now you know. imho, the same is not likely to be said of mv augusta in the foreseeable future.

cre8tif, mrdzul

You asked: "If Gevi SPA can make them turn around by buying it for a value of 1 Euro, why not make them pay back RM500 million?"

I can't think of a basis in law to demand GEVI pay back the RM500 million.

mrdzul made a very enlightening comment "it is not the same as buying a keropok from a grocery store..." Indeed it would have taken a few months before such deals are consumated. During that time Proton would have, I hope, undertaken the necessary due diligence to look very closely at the business, its future prospects and problems of the past. And this exercise would have involved highly paid lawyers, accountants and industry experts.

MVA had accumulted losses of over Euro 100 million when it was taken over. Therefore it is not surprising that the creditors had placed it in receivership. Proton would have been ridiculed if they bought a technically near bankrupt company. So the Euro 70 million was needed to bail it out of receivership which happened just before Proton dished out the money. GEVI buys over Proton's stake as is and I hold the view their decision was easier in the sense that Proton had already covered part of a very deep hole. MVA must have had a debt of at leat Euro 180 million before the Proton came along.

IMHO I believe there is a good case against the old board members involved and perhaps even the advisers. It will be very interesting indeed if this matter winds up in court because the charge will be negligence and/or misrepresentation. Malaysians will get to know what happened. Sadly, I don't think the dialogue with Tengku Mahaleel will take place soon because what he says may be closely monitored and could be fodder for the prosecution later on.

Personally, I think the current board is very well protected. They hired a global investment bank to review the investment in MVA and the painted a bleak picture. So they covered their asses well enough.

One other thing. Proton was faced with a contingent liability at the time of sale of nearly RM925 million. This liability, of which the reported Euro 106.9 million is part of, is now GEVI's baby. If GEVI sells the core assets (excluding goodwill) they must bring in more than RM925 million to make a profit. Or they know how to turn it into a money machine but if you believe the findings of the global investment bank,this is unlikely to happen. Who knows, another sucker may come along to pay a large amount of money for the brand name and the technology.

Birdseye,

You did a lot of homework by digging up the facts. But, important questions remain unanswered.

Proton already paid 70mil euro buying Agusta, and they have the debt freeze. So it's not true Proton needs to fork up extra cash to keep it afloat.

There must be a valid reason behind the move of purchasing MV Agusta. Same like Gevi SpA which willing to take up the liability of debt when taking over Agusta, but the only different is we Malaysian sponsored those 500 million. :)

“MVAM's existing business model is neither operationally nor financially sustainable”. Of course the existing business model is obsolete and therefore you make changes and overhaul it! What so big deal? They used to say the Bolivian’s economy cannot be rescued. But Jeff Sachs did other wise and makes it happen. If you ask what makes us think Proton can handle it? Fair enough, then go to my question number 1.

“Integration of MVAM's operations with those of PROTON is unlikely to deliver significant economies of scale or synergies to the combined business.” Well, if they are dead sure about this, they won’t use the word ‘unlikely’. By the way, the report is generated by whom? The people who pay them for answer they ‘wanted’ to hear! By the way, you must also question the feasibility of the report, coming from someone not in the automobile industry. When Arthur Anderson also can cheat, what else is impossible to happen?

If Agusta is really a trap, nobody would really take it. But then again, Proton, make the decision to purchase it, but why sell it for 1 Euro? Here come the question you Birdseye failed to answer:

Question:

1. Why sell it at 1 Euro?
2. Did Proton really look for other potential buyer? Where is the invitation? Tenders?
3. Is there measures been exhausted to find potential buyers? Proof?
4. And this is the best one, the Ace card: Who is the “fella”/company which brokers the sale of MV Agusta for only 1 Euro to Gevi SpA?

Cheers!

Birdseye,

Sorry, let me rephrase:

Here come the question "the Proton board" failed to answer.

instead of putting your name.

Jeffdaman,

You aked some interesting questions which only the previous and/or the present board can answer. The best that we, joe public, can do is to discover as much information as possible and come to some meaningful conclusion. Needless to say we can be off the mark but so long as we write or say things without malice, this exercise of free speech is justified. I became interested in this topic because I felt the views expressed by some are, frankly, ridiculous. I'm using my past expertise in accounting and finance and restructuring to look into this case. So on to your points.

You said: "Proton already paid 70mil euro buying Agusta, and they have the debt freeze. So it's not true Proton needs to fork up extra cash to keep it afloat."

Jeff, you are mistaken. If you have the time, please read the 29 March 2006 statement by Proton at this link (http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_4439021b-cb73c03a-1f47ae80-de4ea175).
It's long but well written no doubt by paid lawyers and financial advisers. One could of course argue that the paid advisers write what Proton wants them to say and if that is the line one wishes to take, there can be no meaningful discourse and you should tune off my arguments. I choose to believe that this is not the case because my experience does not lead me to conclude otherwise.

Para 3.1.2 of the statement reads: "The additional provisions relating to MVAM in the accounts of Proton Group for financial year (FY) 2005/06 thus far amounts to RM136.2 million. This too does not have anything to do with the disposal but relates to the loans and advances extended via two subsidiaries within the PROTON Group. These loans were extended by Management after acquisition of MVAM."

The last sentence needs no further elaboration.

Para 2.1.3 is also interesting: "Proton CAP had also subsequently considered continuing to support MVAM, both in the immediate-term as well as until such time that MVAM is able to sustain itself, at which time the investment would be reviewed. Again, as a result of the structures put in place, the funding needs of MVAM would have had to be borne solely by Proton CAP. To begin with, at the time the matter was being considered, the scheduled frozen debts remaining to be repaid amounted to approximately €107 million (RM477.28 million). Estimates prepared in September 2005 also suggested that if Proton were to continue supporting MVAM, it should be prepared to inject an additional €40 million into MVAM as working capital until end-September 2006 and up to €66 million until such time that MVAM is able to sustain itself. All of this assumes that the appropriate bank facilities would be made available to MVAM."

Somehow, they manage to structure the deal in such a way that the funding needs of MVA is to be borne solely by Proton. In otherwords, the Castiglioni family needs only to fold their arms and wait. What a deal! I just cannot believe this. If Proton did not sell it must be prepared to fork out another €106 million in working capital needs until such time as MVA can sustain itself. Proton decided it was too risky.

Jeffdaman,

Para 3.3.1 of proton's statement reads: "Since July 2005, Proton has undertaken a review of the major processes, decision-making structures and limits of authorities. In addition, Proton's external auditors, PWC, were also appointed to undertake a review of investments undertaken by Proton in the past to ascertain potential weaknesses in the process leading to decisions as well as to identify means to address these weaknesses."

Appointing Proton's own external auditors to undertake this much needed review is in my view rather silly. It is like asking the fox to guard the hen-house. I've nothing against PWC but one would be justified to ask how come PWC did not see these weaknesses in the course of their annual audit over the years?

They could have asked KPMG or another reputable accounting firm to undertake the review. I hope shareholders will grill the board at the next shareholders' meeting.

Jeffdaman,

My final post on this topic.

"Question:

1. Why sell it at 1 Euro?
2. Did Proton really look for other potential buyer? Where is the invitation? Tenders?
3. Is there measures been exhausted to find potential buyers? Proof?
4. And this is the best one, the Ace card: Who is the “fella”/company which brokers the sale of MV Agusta for only 1 Euro to Gevi SpA?"

I find the board has no choice but to get rid of it. As mentioned earlier the working capital support is a massive Euro 106 million until MVA can stand on its own feet. But it may never be able to do that. And there is still the so-called frozen debt at the end of the day.

But why sell at one Euro?

If you are in GEVI's shoes, will you pay anything at all for a company with negative shareholders' funds? That means borrowings exceed book- value of assets. Like many others, you have focused on the headline grabbing one Euro. It is not just one Euro because GEVI has assumed responsibility for the frozen debt of Euro 106.9 million (plus I think other guarantees to major suppliers, because the overall contingent liability stated by Proton during the sale was approximately RM925 million or Euro 196 million at today's exchange) and they have to provide the additional working capital requirements of another Euro 106 million.

If we assume GEVI has no intention to continue with the business and are only interested to sell the core assets, these assets must fetch more than RM925 million to make a profit. This is the logical conclusion because holders of the rights to claim from Proton in the event MVA were to go bust will have insisted GEVI take over Proton's undertakings or they would have objected to the sale.

The jury is still out whether GEVI will make a dime on this one.

Relax and have a beer. Are you allowed to do this?