KUALA LUMPUR: DRB-Hicom Bhd has received a letter from Ministry of Finance (MoF) today, stating MoF’s approval for the award of a research and development (R&D) reimbursement grant for R&D activities carried out by Perusahaan Otomobil Nasional Sdn Bhd (PONSB).
In an exchange filing today, the conglomerate said the grant represents the culmination of an extensive application process by PONSB on August 19, 2011, amounted to about RM3.7 billion.
“The value of the R&D reimbursement grant is RM1.1 billion and is to be paid in a single lump sum payment directly to PONSB, a wholly owned subsidiary of Proton.
DRB-Hicom said the R&D reimbursement grant will be disbursed only upon completion of the definitive agreements relating to the entry of the proposed foreign strategic partner into Proton, which was announced on May 24, this year.
“There are no restrictions imposed on PONSB on the issue of the RM1.1 billion R&D reimbursement grant, as it is a reimbursement of R&D expenditure already expended,” it said.
DRB-Hicom noted the utilisation of the R&D reimbursement grant will be utilised by PONSB to de-leverage to the maximum extent possible by reducing its existing financial liabilities.
“The de-leveraging process would enable both PONSB and Proton to be in a much stronger credit position to fund its future growth and expansion plans,” it said.
The R&D reimbursement grant would help PONSB to settle in full its syndicated loan facility of the current principal outstanding of RM525 million with a total estimated accrued interest of RM8.3 million.
The company said the use all of the remaining balance of the R&D reimbursement grand award of about RM566.7 million will help Proton to part settle and hence, reducing the amounts owing to DRB-Hicom.
The grant also will repay any third party lenders, which had advanced amounts to service the syndicated loan with interest or profit applicable to such loan.