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Unless Proton has been taken for the world's biggest RIDE, It looks like it's all over for MV. :cross: I just can't see how Castiglioni can get himself out of this one.
BTW, Great Site !
http://www.bernama.com.my/bernama/v3/news_business.php?id=175701
Banker: Proton Lucky To Sell 'Hot Potato' In MV Agusta
By Yong Soo Heong
KUALA LUMPUR, Jan 16 (Bernama) -- Countless number of people have been asking why Proton Holdings Bhd recently disposed of MV Agusta for just one euro (about RM4.50) but information emanating from people familiar with the deal point to the fact that Proton had to quickly let go of the "hot potato" in the Italian motorcycle-maker.
The facts were grim and simple: faced with a massive financial crunch, under-performing sales and rising production costs, Agusta was just days from missing an instalment to one of its creditor banks. The instalment is believed to be well over 10 million euros.
"The consequence of missing an instalment payment to its banks for frozen debts would have automatically triggered a general default on its entire loan package. This would certainly spell bankruptcy and at that point, even one euro would be out of the question," said a European banker involved in the disposal of MV Agusta.
He said Proton's sale of its 58 percent stake in Agusta to Gevi SpA for one euro was "no surprise" to international financial circles.
"Proton was lucky to dispose of Agusta for a token one euro to Gevi because the very banks that lent money to the motorcycle maker had deemed its shares to be worthless," said the banker, who is with a Swiss financial services group.
Agusta had requested for additional capital injection to keep it afloat when its creditor banks refused to extend any more credit.
"When the Proton management offered to pledge its entire Agusta shares to Agusta's banks, they were told the shares were worthless. It was a real turning point.
"If Proton stayed with Agusta, it would have to pump in even more funds on top of the 100 million euros it had already sunk into the company," the banker said.
He disclosed that Agusta's creditor banks were ready to foreclose and if that had happened, Italian law would have held Proton responsible for all contingent liabilities.
He said that although Proton Capital, a Proton Holdings' subsidiary, owned Agusta, Italian law allowed creditors and bankers to go all the way up to the beneficial owners - meaning Proton Holdings would be held liable.
"If this wasn't enough of a problem, several Agusta directors had broken ranks and were on the verge of having the firm file for early bankruptcy. It was really a matter of days," the banker said.
With bankruptcy filing imminent, Proton had to immediately conclude a sale to a buyer willing to take over the ailing Agusta, pump in cash, revive bank credit lines and take over all contingent liabilities, while relieving Proton from any further claims by Agusta's creditors.
"Gevi was the only credible financial investor willing to stick its neck out to fulfil all these conditions. Under Gevi's guarantee, the banks are happy enough to reinstate euro credit line," the banker said.
Agusta has chalked up debts in excess of 100 million euros and requires further working capital of 32 million euros. For the 15 months ended March 31, 2005, Agusta registered a net loss of 29 million euros.
Proton's share of net losses, representing 57.75 percent amounted to 16.75 million euros.
Proton has already given Agusta more money than the 70 million euros reported, providing 29 million euros as cash advance to bail out the troubled Italian company.
Agusta dragged Proton into the red for the first time in a decade. Proton reported a net loss of RM154.3 million for its fiscal second quarter ended Sept 30, 2005, hurt by bad debt charges related to Agusta.
In December 2005, the Proton board approved the sale of Agusta to Gevi for one euro, making the transaction its biggest loss on a single investment.
Agusta cost Proton RM503 million, including its acquisition cost of RM367 million back in 2004.
The disposal of the Italian bike maker will not affect Proton's balance sheet as it had fully written off the investment.
BTW, Great Site !
http://www.bernama.com.my/bernama/v3/news_business.php?id=175701
Banker: Proton Lucky To Sell 'Hot Potato' In MV Agusta
By Yong Soo Heong
KUALA LUMPUR, Jan 16 (Bernama) -- Countless number of people have been asking why Proton Holdings Bhd recently disposed of MV Agusta for just one euro (about RM4.50) but information emanating from people familiar with the deal point to the fact that Proton had to quickly let go of the "hot potato" in the Italian motorcycle-maker.
The facts were grim and simple: faced with a massive financial crunch, under-performing sales and rising production costs, Agusta was just days from missing an instalment to one of its creditor banks. The instalment is believed to be well over 10 million euros.
"The consequence of missing an instalment payment to its banks for frozen debts would have automatically triggered a general default on its entire loan package. This would certainly spell bankruptcy and at that point, even one euro would be out of the question," said a European banker involved in the disposal of MV Agusta.
He said Proton's sale of its 58 percent stake in Agusta to Gevi SpA for one euro was "no surprise" to international financial circles.
"Proton was lucky to dispose of Agusta for a token one euro to Gevi because the very banks that lent money to the motorcycle maker had deemed its shares to be worthless," said the banker, who is with a Swiss financial services group.
Agusta had requested for additional capital injection to keep it afloat when its creditor banks refused to extend any more credit.
"When the Proton management offered to pledge its entire Agusta shares to Agusta's banks, they were told the shares were worthless. It was a real turning point.
"If Proton stayed with Agusta, it would have to pump in even more funds on top of the 100 million euros it had already sunk into the company," the banker said.
He disclosed that Agusta's creditor banks were ready to foreclose and if that had happened, Italian law would have held Proton responsible for all contingent liabilities.
He said that although Proton Capital, a Proton Holdings' subsidiary, owned Agusta, Italian law allowed creditors and bankers to go all the way up to the beneficial owners - meaning Proton Holdings would be held liable.
"If this wasn't enough of a problem, several Agusta directors had broken ranks and were on the verge of having the firm file for early bankruptcy. It was really a matter of days," the banker said.
With bankruptcy filing imminent, Proton had to immediately conclude a sale to a buyer willing to take over the ailing Agusta, pump in cash, revive bank credit lines and take over all contingent liabilities, while relieving Proton from any further claims by Agusta's creditors.
"Gevi was the only credible financial investor willing to stick its neck out to fulfil all these conditions. Under Gevi's guarantee, the banks are happy enough to reinstate euro credit line," the banker said.
Agusta has chalked up debts in excess of 100 million euros and requires further working capital of 32 million euros. For the 15 months ended March 31, 2005, Agusta registered a net loss of 29 million euros.
Proton's share of net losses, representing 57.75 percent amounted to 16.75 million euros.
Proton has already given Agusta more money than the 70 million euros reported, providing 29 million euros as cash advance to bail out the troubled Italian company.
Agusta dragged Proton into the red for the first time in a decade. Proton reported a net loss of RM154.3 million for its fiscal second quarter ended Sept 30, 2005, hurt by bad debt charges related to Agusta.
In December 2005, the Proton board approved the sale of Agusta to Gevi for one euro, making the transaction its biggest loss on a single investment.
Agusta cost Proton RM503 million, including its acquisition cost of RM367 million back in 2004.
The disposal of the Italian bike maker will not affect Proton's balance sheet as it had fully written off the investment.
