The complicated situation regarding Group Lotus and Lotus F1 Team is beginning to become a little more clear. British Prime Minister David Cameron was in Malaysia on Thursday and spoke of improving trade relations between the two countries.
“Britain is back to do business with Malaysia, back to build our partnership on vital global issues,” said Cameron in a joint press conference with Malaysian Prime Minister Datuk Seri Najib Abdul Razak. The pair intend for Malaysia and Britain to have £8 billion in bilateral trade by 2016. The level is currently less than half of that.
It is understood that the future of Group Lotus was discussed during the meeting. Cameron is keen to save the jobs of the hundreds of people employed at Hethel and the many subcontractors in the region that rely on the company. The firm is deemed to be of vital for the economy of Norfolk, which is why it was given a £10.4 million grant at the end of last year by the Regional Growth Fund, the aim being to create jobs in the area. It would be embarrassing for the government if that money has gone to waste.
The problem is that the ongoing takeover of Group Lotus owner Proton (owned by the Malaysian government) by private firm DRB-Hicom has led to a number of changes in the relationship between the car business and Group Lotus. That in turn has impacted on the relationships of both entities with the F1 team that (currently) bears the Lotus name. There has been intense speculation in Malaysia in recent days over whether or not Proton MD Syed Zainal has resigned. Group Lotus issued an extraordinary press statement a few days ago entitled “Never let the facts get in the way of a good story”. This said that the rumours were not true and that similar stories about Group Lotus MD Dany Bahar were also incorrect. This was not telling the whole truth.
Well-placed sources say that Syed was asked to resign and tendered his resignation two weeks ago, although he is continuing to act as Proton CEO, pending the appointment of a replacement. In the last few days he has been in China trying to work out a deal to sell Lotus to one of the three Chinese companies that have expressed an interest. None of them, however, is willing to take on the Group Lotus debts. If one of these deals is agreed there is unlikely to be any protection for Group Lotus at Hethel. Bahar’s situation is rather similar to that of Syed. Sources say that he is no longer a Group Lotus signatory and no longer has any executive power, although he remains nominally in charge. It is believed that he is now keen to get a job with one of the Chinese companies, if they become the new owners of Lotus.
The statement included personal attacks on various people, including me.
I am also told that Proton has not made any loans to the Lotus F1 Team, as has been reported. What actually happened is that the company agreed, as part of the settlement over Group Lotus’s abortive sponsorship of Lotus F1 Team, to take over the debt that the team had with Snoras Bank, which was itself rolled over from an old debt to Renault. The loan is not secured by any of the team’s critical assets, such as the race cars or the F1 entry. The factory buildings are security for that loan, but the team could move elsewhere fairly easily and all that would be left for Proton would be an empty building and a wind tunnel. That is unlikely to happen and the politicians are working to sort out the problems. Group Lotus has sizeable debts with a consortium of Asian banks, many of them with close links to the government and with DRB Hicom. The obvious solution would be find a way to lose the debts and then allow Gérard Lopez of Lotus F1 Team to take over Group Lotus, thus securing the jobs of the staff at Hethel, reuniting the F1 team with the car company, and putting Lotus in a position from which it could prosper and support the government policy of building up British engineering, rather than seeing the Lotus legend sold to the Chinese. An agreement between the two PMs could save embarrassment all round.