KUALA LUMPUR -- A unit of Malaysia's national carmaker Proton plans to sell as much as 2.0 billion ringgit ($526 million) of bonds backed by hire-purchases in the second half of 2004, sources said on Monday. Sources close to the deal told Reuters that Proton Commerce Sdn Bhd, a car financing arm set up in partnership with second-largest lender Commerce Asset-Holdings Bhd, would issue the papers through a special purpose firm.
The funds raised will be used for working capital and business expansion, one of the sources said.
Established in the early 1980s as part of the country's industrialization drive, Proton outsells marques from Toyota and Honda in the mid-ranged passenger car market.
But despite protective tariffs, the state-controlled Proton has been hit by rising competition from foreign rivals, keen to raise their share of Southeast Asia's second largest auto market.
Proton sales dropped 28.5 percent to 43,574 cars in the July-September quarter, contributing to a 33.8 percent fall in turnover to 1.7 billion ringgit.
Proton Commerce was formed last October, with the aim of capturing a slice of high-margin domestic car-financing market.