Join Date: Jun 2001
Location: Catonsville, Md.
Mitsu's getting some money
From Automotive News:
Mitsubishi to receive $3.93 billion in aid
TOKYO -- Mitsubishi Motors Corp. is in final talks with the Mitsubishi group to receive $3.93 billion in aid, including a capital boost and debt-equity swap, sources familiar with the talks said.
Mitsubishi Motors needs cash to develop new cars and overhaul its loss-making operations but faces an uncertain future after DaimlerChrysler AG, which has a 37 percent stake in it, pulled the plug on a multi-billion-dollar refunding last month.
The automaker has been working with other big shareholders -- trading house Mitsubishi Corp., machinery maker Mitsubishi Heavy Industries, and the Bank of Tokyo-Mitsubishi -- to secure funding.
Under the new plan, the three companies would take 40 billion yen of newly issued preferred shares each, while other Mitsubishi group companies will take more than a combined 30 billion yen.
As a result, the Mitsubishi group, which holds a combined 32 percent in the auto maker, will account for more than 150 billion yen of the capital infusion, the sources said.
In addition, BTM and Mitsubishi Trust & Banking Corp. will agree to swap up to 200 billion yen of debt into preferred shares, the sources said.
The Mitsubishi group is also negotiating with Phoenix Capital and other private funds for a capital infusion, they said. Phoenix has close ties with Mitsubishi Tokyo Financial Group, which owns BTM and Mitsubishi Trust & Banking.
Local media have said Phoenix Capital could take around 200 billion yen in common shares, which, unlike preferred stock, carry voting rights. That would make it Mitsubishi Motors' biggest shareholder.
As part of the restructuring, Mitsubishi Motors will close one of its under-utilised domestic plants, transferring production of the Pajero SUV at a plant in Gifu prefecture to the Okayama plant, also in central Japan, the sources said.
To reduce vehicle development costs, Mitsubishi Motors will also discontinue some models other than its core small cars and SUVs.
Through this and other measures, the automaker aims to return to the black by the business year ending in March 2006, the sources said.
Dogged by more than $10 billion of interest-bearing debt, Mitsubishi Motors expects a net loss of 72 billion yen for the year that ended in March after its easy credit policy in the United States backfired.
It plans to gain approval of the new business plan from DaimlerChrysler this week and announce the outline on Friday, along with its earnings results.