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Millions in debt is wiped out for Lotus

Malaysian car company Proton last night completed a financial restructuring of Group Lotus, wiping out debts of more than £60m.The move is designed to strengthen the finances of the Norfolk based sports car manufacturer, which has just embarked on a new five year turnaround plan.The plan, which is being overseen by chief executive Mike Kimberley, includes the launch of three new models and an expansion of its engineering division.Earlier this year Group Lotus reported pre-tax losses of £17.7m for the year to the end of March 2006, up from £6.7m in 2005.The losses grew despite the company selling a record number of cars, as the rising dollar squeezed margins on cars exported to the United States.Lotus was left with £18m worth of unsold cars after a slowdown in sales in the US, forcing the company to cut production with the loss of 200 jobs at Hethel.At the same time the company's engineering division saw turnover drop sharply following the loss of a major contract.Proton, which acquired the Norfolk car maker a decade ago, had already provided the company with a £48.8m loan to cover debts run up with external lenders.This loan is now being turned into equity in Group Lotus, effectively writing it off.