Posted: Tuesday, 27th December, 2005 : 7:44 PM - - 6,800 Reads

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The buyer, Italian investment holding company Gevi SPA, will assume Agusta's euro106.9 million (US$126.8 million) debt and euro32.5 million (US$38.5 million) working capital requirements, Proton said in a statement.

Proton said it paid euro70 million (US$59.32 million) for its 57.8 percent stake in Agusta in 2004, adding that the sale of the stake was "consistent with Proton's direction of divesting noncore assets.''

Proton last month blamed provisions for Agusta's debts with banks and suppliers as one of the reasons it suffered a net loss of 154.3 million ringgit (US$40.8 million; euro34.8 million) in the three months ended Sept. 30.

Proton Chairman Azlan Hashim has previously said the purchase of Agusta was supposed to have been "an opportunity mainly to gain access to a global brand, world-class engineering and design.''

However, he noted that "the investment has not met expectations.''

Proton said Tuesday its sale of Augusta is not expected to have any effect on earnings.

The carmaker has come under pressure to return to profitability after its domestic market share dwindled to around 30 percent in June from 44 percent last year, as the government is slowly lifting protective tariffs on foreign-made cars due to a regional free trade agreement.

MV Augusta, which is under bankruptcy protection, makes bikes under the Augusta, Cagiva and Husqvarna brands.

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