DaimlerChrysler plans to raise its stake in troubled Japanese affiliate Mitsubishi Motors to over 50% from 37% as early as next business year, a Mitsubishi group source told Reuters.
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Another Mitsubishi group source last week said that DaimlerChrysler is hoping to secure around 700 billion yen ($6.6 billion) in rescue funds for Mitsubishi Motors, which, the news agency noted, is reeling from losses resulting from a strategy of offering easy car loans to boost US sales.
Mitsubishi Motors, Japan’s only unprofitable car maker, is scheduled to announce a new restructuring plan on April 30, centring on a large capital infusion by its main shareholders, Reuters said, adding that, if DaimlerChrysler takes a majority stake in Mitsubishi Motors, it will be the first time that a foreign car maker has made a major Japanese counterpart a fully consolidated unit.
“Generally this is a possibility,” a Daimler spokesman told Reuters on Tuesday, adding: “But currently it’s not an issue since the two prerequisites – sustained profitability and a considerable reduction in debt – haven’t been fulfilled, nor has the mid-term business plan for Mitsubishi been finalised, and any reports alleging that decisions have already been reached are incorrect.”
The source reportedly said DaimlerChrysler would probably wait to raise its holding in Mitsubishi Motors until at least the year beginning in April 2005, since the company would probably book heavy restructuring charges and post a net loss in the current business year ending next March.
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By GlobalDataThe source also told Reuters three Mitsubishi group firms – Mitsubishi Corp., Mitsubishi Heavy Industries and the Bank of Tokyo-Mitsubishi – would provide around 100 billion yen ($US947.9 million) in financial aid while other Mitsubishi group companies, including Mitsubishi Electric Corp., Nippon Yusen KK and Tokio Marine & Fire Insurance Co have also been asked to help.
The amount of the planned capital increase and the number of new shares to be issued is likely to be decided by the end of this week, he reportedly added.
For other funding needs, Mitsubishi Motors is also planning to ask the state-owned Development Bank of Japan for loans, sources have told Reuters.
