MV Agusta sale sparks controversy

The deal was done with Genoa-based finance company GEVI SpA, which will take over MV Agusta's existing debts, which are said to be considerable and increasing (there was a 26 million Euro operating loss over the last 15 months), despite healthy sales on some of its product lines. Proton paid 70 million Euro for the firm in July 2004.

Proton is in financial trouble of its own and has decided to strip away what it sees as non-core assets. Among the most vocal critics of the deal are former Malaysian Prime Minister Tun Dr Mahathir, who was an advisor to the company, and former Proton CEO Mr Tengku Mahaleel.

"Assuming that this relieves Proton from paying the loss incurred by MV Agusta over the 15 months at Euro 26.87 million, it would still lose the purchase price of euro 70 million by selling off at one Euro," they said in a joint statement.

However financial markets take a more positive view, raising the value of Proton shares after the announcement. MV Agusta is reported to have frozen restructured debts of 106 million Euro with a further 32 million required for working capital.

The company has been recording strong sales growth. In late 2004 it announced: "Between January and August, the MV Agusta Group delivered 5180 motorcycles to the Italian market. This represents an increase of 778 units on 2004 and serves to confirm the continental trend where we now have 11,245 new customers as opposed to 9578 last year. The best performances came from Germany (+23.49%), Spain (+55. 45), France (+15.22%) and Belgium (+18.54%). There were also significant changes in Portugal and Norway with respectively 119 and 110 units lifting them into the three-figure category. Further from home, the figures from Australia showing double the usual sales were boosted by a new Husqvarna sales network that soared from the 299 recorded in 2004 to the current 596."