Mitsubishi Motors Corp, Japan's fourth-largest carmaker, will "quickly" need 5.5 billion euros (US$6.7 billion) in aid from DaimlerChrysler AG and other shareholders to pay off debts and return to profit by 2008, Der Spiegel magazine said, citing an internal DaimlerChrysler study.
Germany's DaimlerChrysler, which owns 37 percent of Mitsubishi, would have to pay 2 billion euros of the sum and take control of its Japanese affiliate, the Hamburg-based magazine said in an article to appear today's edition.
The report cited a turnaround plan by Andreas Renschler, president of DaimlerChrysler's Smart GmbH unit, who is leading a team working on a concept to rescue the Japanese carmaker. If DaimlerChrysler takes over the majority of Mitsubishi, it will have to fully include the company's results in its balance sheets this year or from early 2005 onward, Der Spiegel said.
DaimlerChrysler's management board will decide at a meeting on April 19 if it will aid the Japanese carmaker or exit the business, according to Der Spiegel. Its supervisory board will vote on a plan for Mitsubishi on April 29.
Meanwhile, the Nihon Keizai newspaper said that DaimlerChrysler and the Mitsubishi group, the major shareholders of Mitsubishi Motors Corp, may give ?400 billion (US$3.8 billion) to ?500 billion in aid to Japan's fourth-largest automaker to help it cut costs and develop new models.
Mitsubishi Motors, Japan's fourth-largest automaker, will sell preferred shares to the major shareholders to raise funds, the paper reported, without saying where it got the information.
The Tokyo-based company will also apply to the Ministry of Economy, Trade and Industry for preferential tax treatment under Japan's industrial revitalization law to help cut debt, the paper said.
The company had the biggest sales drop among automakers in the US last year after scrapping zero-interest, no-down payment auto loans in response to surging customer defaults.
"Mitsubishi Motors will announce its new mid-term business plan on April 30," spokesman Junzo Ishino said. "Prior to this, we don't comment on speculation."
Renschler will replace Rolf Eckrodt as Mitsubishi Motors' president and chief executive officer after a June shareholders' meeting, the paper reported. Renschler may join the unprofitable automaker as an adviser this month, the report said.
Mitsubishi Motors's business plan will include measures to trim capacity by closing one of three factories in Japan, the paper said.
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