FULL INTERVIEW: Group Lotus boss Dany Bahar says moving the company out of Norfolk makes no sense

Shaun Lowthorpe (SL): There has been a lot of speculation about Group Lotus and what DRB-Hicom is planning to do, and some suggestion they are lining up a Chinese buyer. Is that the case, are there talks going on, are you party to that?

Dany Bahar (DB): I can only report from inside the company. The bulk of all the speculation is coming from the outside, I wonder sometimes myself where it comes from, how they have the knowledge because at some point it is ridiculous what they write.

All I can tell you is that our mother company has been sold to a private company, to a large industrial conglomorate, which actually does not have a knowledge of the sports car business outside Malaysia.

They simply needed time to understand what all the Proton subsidiaries in Asia and we in the UK are doing. They are taking advice and analysing the business, first of all to see what we were doing over the last two years and to see whether they would be interested in continuing the business, or have no confidence and therefore would like to sell.

I think that's normal for any buyer that comes in. They first want to look at the business and then decide what they want to do.

Please also bear in mind that under Malaysian stock exchange law, there is this 90-day period where actually even DRB wasn't in a position to act quickly and immediately because there are certain procedures they needed to follow. And that is actually the real issue we have, because in that time we weren't able to receive the appropriate funding from the mother company to continue the investment we started two years ago. It was nothing else. There is not anybody to blame here, it is maybe the system to blame that these laws are in place. We have to go through this and I am sure as soon as it is over DRB will make a decision.

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SL: Have you any sense of what that decision will be? Have you met them?

DB: We are in close contact with them, we have been there, they have been here in Hethel to see what we are doing. We talk to them, obviously. My feeling is they need to understand the business. There is a lot of information to digest, because Proton is an 11,000-people company, they have so many subsidiaries, and one of them is Lotus. I don't have a real feel whether they want to continue with it. I believe they like the company, and what they see. I think they see the value of the competence and the capabilities we have in our company and they see obviously where we want to go. But at the end it's an economic question whether they are willing to take this risk or not, and I don't know. It's not up to me to discuss those shareholder matters. I have no feeling for that.

All I know for sure and I've read some articles to say they want to do a fire sale. This is something I can simply say is not true, because if all they want to do really is get rid of the company, they would have done already weeks ago. That's absolutely not the case. All they want is to simply take time and to understand the business. There is no fire sale here and there – that's rubbish.

SL: Because of all the uncertainty, there is this suspicion that they may have been talking to the Chinese to try and line up a buyer.

DB: This is also rubbish. We talk to the Chinese every day. We have so many Chinese clients in our engineering departments and Proton is about to enter into a joint venture with the Chinese partners. It's simply the market at the moment is growing quickly in our sector.

'Chinese' is a broad definition. We are in constant talks with them, but I have not seen so far, and I am CEO of the company, one company coming to our facilities and doing the due diligence because they want to buy the company.

I have not seen anything and that's why all this 'fire sale' thing I believe is rubbish.

I spoke with Richard Bacon and we discussed the situation and I reassured him that I'm not aware of any sale. And I guess a sale of this magnitude would require a lot of due diligence and analysis and I have not seen anyone at Hethel to do that.

SL: On the China question, you obviously work closely with China Youngman and you set up this venture Lotus Youngman in January. Some people have said the timing of that just before the Proton sale is suggestive of possibly being a vehicle to sell off any assets. Can you shed any light on that?

DB: This is another completely wrong speculation, but really wrong. It's simply not the facts. Youngman is a passenger car company in China which is a long-standing customer of our engineering department. It's actually the largest company we have over many years. We developed their entire product range, the first one just launched a few months ago. It's an engineering partner of ours. We had an idea of discussing a joint venture in China to build up engineering services and to build up, maybe, products together in a different segment. This started 18 months ago and never came to a conclusion. Establishing the shelf company was actually just a preparatory measure. We did not enter into a JV (joint venture). It's actually an engineering client.

Youngman is not our importer in China. We have a completely different distribution company. There's a complete confusion.

SL: There is a lot of uncertainty about the future of the jobs at Hethel. Do you want Lotus to stay in Norfolk, is that your intention, or is it out of your hands?

DB: We would not have applied for an RGF (regional growth fund) grant if we didn't have the intention to actually produce jobs here in Norfolk. Luckily with the support of the government we were granted that. So far, we have not received it because we obviously don't fulfil the conditions during this takeover time, but I hope one day we will.

It was always our intention to keep the factory here, because I think if you were to move the factory away from this place, you would change something in the history and the DNA. That's wrong.

We have invested a lot of money, more than �100m, in the development of the cars so far and also the upgrading of the facilities. The goal when everything was set out was to produce here. If there ever is a buyer, whoever it is would have to write off all the investment if he wanted to take the production somewhere else, and this economically just does not make sense. Moving a factory or shutting down a factory just for 5,000 cars and setting up somewhere else doesn't economically make sense. I think there is no big risk – that's my personal opinion, and I cannot rule it out, but I think it just doesn't make sense to do that.

We would always encourage whoever comes into this business or even the current shareholders to simply keep everything here, because the workforce is here, the brain is here, the history is here, all the investments have gone into the facilities upgrade. It just doesn't make sense to move it. Honestly.

SL: The other name that has been mentioned is Genii Capital. You obviously have a link with them through Formula One. They've told us that they are interested and they have looked at the books. Is that the case, are they serious?

DB: Genii is a very good partner of ours in F1 and we enjoy a very good relationship with them. Since day one, we have had this common goal and sense that having the Formula One team together with the sports car manufacturer would very much make sense. We have come one step closer by reuniting the brand, even if the companies are completely separate. That's a really big step. Whatever happens will happen. Genii has expressed interest and if there is a good deal to be done, why should they not be interested? I think it would just make sense.

SL: South Norfolk MP Richard Bacon said that one of the concerns he had was that DRB hadn't handled this very well, and maybe you yourself hadn't handled this well by not being very clear about what was going on. Do you think you or they could have handled this better?

DB: Every company, or every ultimate decision maker in a group, has a communications strategy. Proton and also DRB's strategy is one of a reactive communications strategy rather than a pro-active one. They don't react to everything. That's a strategy that might sometimes work and sometimes not work. There are pros and cons to that strategy and I don't want to judge. In the last two years, we were able to move the brand where it attracts attention, either positive or negative. I think it would be wrong to comment on everything.

Could I have communicated more effectively? It comes back to the company strategy. I have to follow the guidelines that my shareholders put to us and that is one of not actively communicating.

SL: How quickly do you think this will be resolved and you can get on and do what you want to do, which is make cars?

DB: The one thing I don't really understand is when somebody tries to blame the new shareholders and put them in a difficult position.

I have to defend them. They are actually not to blame at all, because they came in very late and have to follow the same procedures under stock exchange law as anybody else. Even if they wanted to communicate better, I am not sure they had something to communicate, because they only finished the due diligence five days ago. I don't think there was anything to communicate other than what they have done already, which is to say we have to look at the business. When the time is appropriate, we will make the decision.

SL: If they conclude maybe Lotus is a luxury they can't afford, or not part of their strategy, what's the next best option for you? Do you accept it might be sold? What's the plan B if they say 'we're selling'?

DB: I'm not the owner of the company, I am sure they have made their calculations and when they made their decision I'm sure they were aware of what's concluded there. There are several options about what to do with the company and I am very confident that DRB is evaluating them very carefully. All we are doing at Hethel is simply concentrating on the job and trying to deliver in these difficult circumstances as much as we can and focus on our job and try not to be distracted too much.

We have actually resumed production and the development programme for the Esprit car. That is a very good sign that we will go back to normal in the next few weeks because we obviously need to ramp up again to be able to produce the cars. I'm confident from the end of May, beginning of June, we will be able to produce and deliver our cars again.

SL: In terms of keeping Lotus here, I think from what you are saying that there is no suggestion that you are going anywhere else, it just wouldn't be worthwhile?

DB: To be honest in my personal opinion I would rule that option completely out, that it's going anywhere else because I just see the implications – technically and economically – and I just don't see this would work. You have to also be fair to the Asian OEMs (original equipment manufacturers) that actually grew a lot in the past few years. In the recent takeovers, you have rarely seen a complete shutdown of production and a move somewhere else. I think that was maybe the old times. Today is a much different dynamic, even the Chinese would understand something like that because it would not make sense. On the other hand I also read some speculation about going into insolvency, why would the new owners do that? Where is the logic? That's something that's complete rubbish as well. I rate DRB as a highly moral and ethical company in their conduct and the dealings we've had so far with them were highly professional so I would not suggest they would actually think about something like that.

SL: When do you think you will have clarity on this? Do you see a light at the end of the tunnel?

DB: The immediate issues we had, that we actually reduced production and work on the current cars, that is all about to go back to normal now as we speak. That for us is a major relief and a major milestone to pass. To come back to the plan we are working against, all is about the first product and if we can deliver that first product everything based around that is a bonus.

What we are concentrating on is improving our product line-up to come out with a very exciting experience on the Evora and the Elise and to come out and deliver the first Esprit. That's what we are working on. Everything else, it is too early to say, and there, really, the new shareholder will have to decide which direction they want to take the company.

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