Proton Gets $309 Million Malaysia Bailout

Struggling Malaysian carmaker Proton Holdings Bhd has received nearly 1.3 billion ringgits ($309 million) in government aid to service debt and pay suppliers.

The deal will give Govco, a government subsidiary, 1.25 billion redeemable convertible cumulative preference shares in Proton, according to The Nikkei. If the shares are converted at the end of their 15-year tenure, the government will again become Proton’s major shareholder.

Under terms of the government bailout, Proton must within a year find a strategic foreign partner to help the carmaker become more competitive. The company has failed repeatedly to do that over the past decade. But Malaysia’s trade minister says Proton’s current business model is “not sustainable.”

Proton was launched in 1983 as a government project in partnership with Mitsubishi Motors Corp. Shielded by protective tariffs, Proton soon captured roughly 70% of the Malaysian car market. But sales slid as competition from higher-quality Japanese models rose.

Today Proton, which is owned by DRH-Hicom Bhd, controls only 15% of the Malaysian car market. The carmaker’s export business has virtually disappeared.