Mitsubishi Motors Corp. (MMC) is talking to several investment funds about their possible participation in a rescue plan after main shareholder DaimlerChrysler AG pulled out last month, Mitsubishi group sources told the Reuters news agency on Thursday.


A number of funds have expressed interest in participating in a bail-out that is now expected to total around 400 billion to 500 billion yen ($US3.54 billion to $4.43 billion), the sources reportedly said.


According to Reuters, Japan’s Kyodo news agency and the Tokyo Shimbun daily reported that US investment fund Ripplewood Holdings could inject some 100 billion yen into the car company though Ripplewood said it was not considering an investment in Mitsubishi Motors at this point.


“We have not put up our name as a candidate for Mitsubishi Motors and we are not considering an investment,” Ripplewood spokesman Atsushi Kuse told the news agency.


He reportedly added that there had been no request at this stage from Japan’s fourth-largest car maker for funding.


Mitsubishi Motors itself declined to comment though a separate source told Reuters the company was seeking cash from Phoenix Capital, a Tokyo-based fund that raises money in the capital markets to revitalise distressed firms. The fund reportedly has close ties with Mitsubishi Tokyo Financial Group, which owns the carmaker’s main creditor bank.


MMC faces an uncertain future after DaimlerChrysler, which has a 37% stake, pulled the plug on a multi-billion-dollar refunding last month, the report said.


It badly needs cash to develop new cars and overhaul its loss-making operations, and has been working with its other big shareholders – trading house Mitsubishi Corp., machinery maker Mitsubishi Heavy Industries and the Bank of Tokyo-Mitsubishi – to secure funding, Reuters noted.


Group sources told the news agency three Mitsubishi group companies had initially planned to inject about 100 billion yen into the ailing vehicle maker through a capital increase, but will probably seek a significant amount of funding from other group firms too.


Reuters noted that Mitsubishi Motors’ new business plan is expected to be announced on May 21, along with its results for last year, and, dogged by more than $10 billion of interest-bearing debt, MMC is expecting a net loss of 72 billion yen for the year that ended in March after its easy credit policy in the United States backfired.


The report said Ripplewood led the consortium that bought the Long-Term Credit Bank of Japan five years ago – the bank had crumpled under a massive pile of bad loans and Ripplewood relaunched it as Shinsei Bank which made a successful debut on the Tokyo Stock Exchange this year, bringing huge profits to Ripplewood.


Late last month, a report that MMC would seek help from cash-rich Toyota Motor Corp. also gave a boost to the stock despite denials from both companies, Reuters noted.