Lotus to go belly-up?
The Norfolk-based manufacturer is an official partner of the eponymous Formula One team but it does not own a stake in it. Being a partner is not the only connection between the two as Proton, the Malaysian company which owns Group Lotus, is understood to have given the team a £35m loan in 2012 so the health of the manufacturer could have consequences for F1.
There is a long-standing joke in the motor industry that Lotus stands for 'Lots Of Trouble Usually Serious' and that couldn't be a better description of its financial predicament.
In the year to 31 March 2013 its car sales crashed by 40% to just 1,177. Engineering revenue reversed 37.5% to £22m giving Lotus total turnover of £89.9m whilst costs accelerated 4.6% to £250.6m. It left the company with a shareholders' deficit of £111.4m and led to it breaking its banking agreements.
During the year Lotus secured a £270m bank loan and one of its key conditions was that the company had to maintain positive shareholders' funds. Breaching this forced the management of Proton into negotiation with its bankers and the lead lender agreed to waive the condition until 31 March 2014.
Proton is planning to re-finance Lotus' debt to smooth the road ahead but its deputy chief executive Lukman bin Ibrahim says that until this has been completed, "there is a material uncertainty which may cast significant doubt over the group and the company's ability to continue to operate as a going concern." More at Pitpass.com