In Cars, Local News, Proton / By Gerard Lye / 18 January 2019 2:41 pm / 23 comments

A civil suit has been served to Proton Automobiles China Ltd (PACL), an indirect wholly-owned subsidiary of Proton Holdings Berhad (PHB), by Goldstar Heavy Industrial in China’s Guangdong High People’s Court. The sum being claimed by Goldstar is RMB860,613,418.15, which is equivalent to RM522,908,712.87 at the time of the announcement.

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

In a filing with Bursa, DRB-Hicom said the claims are in relation to a contract involving PHB, Lotus Group International Limited (LGIL) and Goldstar to establish a joint venture company named Goldstar Lotus Automobile (GLAC).

The parties entered the equity joint venture contract (EJVC) on April 17, 2015, which has since been terminated on January 22, 2018. The purpose of the joint venture was to establish a company to produce and sell Lotus cars, engines, parts, components and accessories.

As per the terms mentioned in the EJVC, 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%).

However, after the JV company failed to obtain the required manufacturing licence by the extended December 31, 2017 deadline, the contract was cancelled on January 22 last year, resulting in GLAC being unable to commence its business.

DRB-Hicom has said its legal advisors are currently reviewing the claims, and will take the necessary action to defend itself. Meanwhile, the company also made it clear that the current legal suit does not involve Zhejiang Geely Holding Group (ZGH) in any way.

This is because the economic interests of PHB and LGIL in GLAC were transferred to DRB-Hicom on September 29, 2017, a few months after DRB-Hicom entered into a share subscription agreement with ZGH.

Previously, Proton sold off Lotus in its entirety, with ZGH obtaining a 51% stake in the British company, while the remaining 49% was picked up by Etika Automotive.