Mon, Jul 05, 2004 - Page 10 News List

Mitsubishi Motors investment is `long term,' Ando says

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Phoenix Capital Co, a Japanese investment fund set to become Mitsubishi Motors Corp's largest shareholder, will invest in the automaker for three to five years, said Phoenix chief executive officer Yasushi Ando in an interview on Japan's NHK Television.

"We want to invest with a long-term view," said Ando in the interview. "I am sure Mitsubishi Motors can become profitable as long as it reduces costs and regains trust."

Mitsubishi Motors may need a ?546 billion (US$5.04 billion) bailout after sales in Japan and the US plunged following the recall of more than 800,000 cars, trucks and buses this year.

The automaker's ex-president and other former executives have been arrested on charges they didn't report vehicle faults that may be linked to two fatal truck accidents.

The Tokyo-based automaker said it will speed up a plan to reduce costs, which includes cutting 22 percent of its workforce.

The company said in June it aims to cut an extra ?34.4 billion in costs this year and a similar amount next year as it trims salaries by 5 percent and cancels bonuses.

"Our fund just doesn't wait for companies' share prices to rise and be passive," Ando said. "Our domestic and foreign investors want to increase the value of the companies" that we invest in, he said.

Mitsubishi Motors will sell ?100 billion of shares to Phoenix on July 15, giving the Tokyo-based investment fund more than a 40 percent controlling stake in the carmaker.

Ando, 45, a former Bank of Tokyo-Mitsubishi Ltd executive, has said Phoenix has committed ?20 billion of its own money and ?50 billion from unidentified foreign investors. Ando was appointed to the board of Mitsubishi Motors on June 29, along with six other new board appointments.

Mitsubishi Motors shareholders approved a plan to sell the automaker's shares for ?100 each to Phoenix, ?69 lower than the ?169 closing price in Tokyo on Friday.

The company will also receive funds from Mitsubishi Group Companies, JP Morgan & Chase Co, and Taiwan's China Motor Corp (中華汽車) after former main shareholder DaimlerChrysler AG balked in April at investing more money.

Mitsubishi Motors has too many auto bodies and parts that don't reflect customers' preferences, Ando said. Mitsubishi Motors executive have said they plan to reduce the number of models from 33 and stop making Diamante luxury sedans.

"Mitsubishi Motors traditionally has talented engineers but they made too many models, which increased costs," said Ando in the TV interview. "When there are too many auto bodies and parts, it takes more time for quality checks. We will cut the number of parts and increase the time spent for quality checks."

Mitsubishi Motors management went back 11 years to 1993 and found there were 26 cases of faults that required recalls, said Mitsubishi Motors Vice Chairman Koji Furukawa.

The automaker has since reported 20 of those to the government and will file the final six to Japan's transport ministry this week, Furukawa said.

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