Proton Holdings said on Thursday it was not considering a capital repayment.

"Proton is continuously evaluating the best possible use of its financial resources, taking into account its future development and project expenditure," Proton, denying a newspaper report, said in a statement cited by Reuters.

The local Star newspaper reportedly had said earlier that Proton, which has 2.51 ringgit ($US0.67) a share in net cash, may return excess capital to its shareholders before teaming up with a foreign partner.

Proton said on Wednesday Europe's largest automaker, Volkswagen AG , had expressed an interest in taking an equity stake in the company, Reuters noted.