Sun, May 16, 2004 - Page 11 News List

Mitsubishi Motors to announce aid plan

AFP , TOKYO

Troubled Mitsubishi Motors Corp, now undergoing major restructuring, will announce a financial assistance program next week, including a US$3.9 billion capital increase, a daily said yesterday.

According to the final draft of its business rehabilitation plan, Mitsubishi Motors will boost its capital by some ¥450 billion (US$3.9 billion) through new-share sales and debt-for-equity swaps, the Nihon Keizai Shimbun said.

Other Mitsubishi group firms and some rehabilitation funds have already agreed to buy the new shares, the business daily said, adding that the auto maker is likely to announce the plan Friday.

Mitsubishi Motors is working on a restructuring plan with help from Mitsubishi group firms after its top shareholder, DaimlerChrysler, announced last month it would not offer any new financial aid to the money-losing carmaker.

Mitsubishi Motors has been hit by slumping sales in the key North American market, heavy debt and recall scandals.

Under the plan, Mitsubishi Heavy Industries Co Ltd, Mitsubishi Corp and Bank of Tokyo-Mitsubishi Co Ltd will each purchase some ¥40 billion in preferred shares, the newspaper said.

Other Mitsubishi group firms will buy some ¥30 billion in preferred shares, it said.

In addition, Bank of Tokyo-Mitsubishi and Mitsubishi Trust and Banking Corp will acquire preferred shares for some ¥130 billion in loans extended to the auto maker.

Mitsubishi Motors also plans to raise some ¥150 billion by issuing common stock to Phoenix Capital Co, a corporate rehabilitation fund, and other companies.

Following the capital increase, DaimlerChrysler's stake in the auto maker will drop to less than 30 percent from the current 37 percent, Nihon Keizai said.

The rehabilitation plan also calls on Mitsubishi Motors to close one domestic and one Australian production base and reorganise its business structure with a focus on Japan, China and other Asian countries, the daily said.

In North America, the company will scale down the operations of its factory in the US state of Illinois and liquidate its financing subsidiary after writing off losses, it said.

With the rehabilitation programme, the car maker hopes to return to the black by March 2006, it added.

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