When sports car company Lotus had announced the end of its title sponsorship of the Lotus F1 team, a red flag was raised as concerns over Group Lotus’ financial problems surfaced. Now, new reports reveal that the troubles facing the automaker are more than meets the eye.
Earlier warning signs were brought to attention this year when Lotus’ Malaysian parent company Proton sold a controlling stake to another Malaysian conglomerate, DRB-Hicom. As per Malaysian law, Lotus had to halt all business operations and freeze its financial accounts during the 60-day transition period.
The 60-day period ended in March and now, new owner DRB-Hicom is currently conducting the due diligence of Group Lotus, investigating worrisome figures including Lotus’ $320 million in accumulated debt.
Due to the mounting concerns, rumors have spread that Lotus may be put into administration to free itself from debt and that even CEO Dany Bahar has been let go from the company. What’s more, in line with our reports earlier this year, Chinese automaker Zhejian Youngman Lotus Automobile (Youngman) is a potential buyer of the brand, placing a bid on its remaining assets, including naming rights. The official importer of Proton and Lotus cars in China, Youngman is perhaps better known for its past failed attempt to purchase the now defunct Saab.
So far, a Lotus spokesperson has denied these rumors and insisted that DRB-Hicom and Lotus executives are working to keep the business running as usual, “There have been and continue to be positive discussions between Group Lotus senior management and senior management at DRB-Hicom both here in Hethel and in Malaysia. Despite various rumours in the media to the contrary, at no point has DRB-Hicom indicated to Group Lotus that they intend to put the company into administration and we welcome the opportunity to put that rumour along with incorrect speculation that production has stopped, that Dany Bahar is no longer CEO and that we are no longer involved in F1 to bed.”
The spokesperson adds, “It’s no secret that we are going through a very difficult time at the moment due to the change in ownership but we’re doing everything we can to get through this period and come out the other side stronger than before.”
Optimistic words, but something definitely isn’t right in the house of Lotus. Stay tuned for more information as the situation continues to develop.