Mitsubishi Motors said on Wednesday it was preparing to issue new shares and appoint an executive from parent DaimlerChrysler AG as part of a soon-to-be unveiled turnaround plan.
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According to Associated Press (AP), the announcement followed speculation that the German-American carmaker may have to make an expensive injection of capital into debt-burdened Mitsubishi, of which it owns 37%.
Tokyo-based Mitsubishi reportedly said in a statement that it would seek shareholder approval this month for a midterm business plan raising the ceiling on the number of shares that can be issued under its articles of incorporation.
The proposed new ceiling of 5.93 billion ordinary and preferred shares is almost twice the current limit of 3.22 billion shares, AP added, noting that the carmaker has about 1.48 billion ordinary shares outstanding and has never issued preferred stock before.
According to AP, a spokesman described the planned amendments to the articles of incorporation as part of a strategy to “strengthen (Mitsubishi’s) capital base” but declined to comment on whether DaimlerChrysler was set to buy more shares.
The details of the turnaround plan will be unveiled at an extraordinary shareholders meeting on April 30, the unnamed spokesman reportedly said.
At that time shareholders will also be asked to approve the appointment of senior DaimlerChrysler executive Eckhard Cordes as a non-executive member of Mitsubishi’s board, the statement said, according to the report.
AP said the expected appointment of Cordes is seen as a token of DaimlerChrysler’s commitment to getting its Japanese affiliate back on its feet.
Hurt by weak US sales, Mitsubishi expects to post a group net loss of 72 billion yen ($US671.5 million) for the fiscal year ended March 31, reversing a record net profit of 37.4 billion yen in the previous fiscal year, Associated Press added.
