Mitsubishi Motors shares soared 14% higher on Friday after its main shareholder, DaimlerChrysler, said this week it may inject more capital in a move to strengthen the Japanese firm’s balance sheet, Reuters reported.
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The report said a capital increase would be a strong show of support for the restructuring carmaker, which has been battered badly by troubles at its US sales finance firm.
“There is discussion of a capital increase which may make sense but there is no decision yet,” DaimlerChrysler chief financial officer Manfred Gentz told an analysts’ meeting on the sidelines of the Detroit motor show on Wednesday, Reuters noted.
Gentz reportedly said, however, that DaimlerChrysler AG had no intention of boosting its 37% stake in Mitsubishi until the Japanese company had improved its finances.
A Mitsubishi Motors source told Reuters thatm if other major shareholders such as Mitsubishi group firms bought stock in the company and there was a free float of some shares, then there could be a capital increase without DaimlerChrysler lifting its stake.
Group firms such as Mitsubishi Heavy Industries and Mitsubishi Corp. have a combined holding of around 33.8% in Mitsubishi Motors, the news agency noted.
According to Reuters, Mitsubishi Motors’ shares ended [Friday trading in Japan] up 14.29% at 256 yen. At one stage, they rose as high as 266 yen which was their highest level since last October, the report added.
Market participants also noted that Mitsubishi Motors shares have long lagged rises by healthier peers, Reuters said, adding that the stock price is basically flat compared with the beginning of last year, underperforming a 22 percent jump for the transportation equipment sector.
Reuters said that, although this business year was meant to be the final year of Mitsubishi Motors’ turnaround, capping three years of restructuring, it posted a huge first-half loss and slashed its forecast for the full year.
Financial troubles stemming from loose credit controls at its North American finance unit, which necessitated a large extraordinary provision, have come as a vicious price war in the US market escalated, causing sales there to slump, the report added.
Reuters said the yen’s recent strengthening is also expected to further sap earnings – Mitsubishi Motors expects to post a net loss of 11 billion yen ($US103.6 million) for the full year to March 31.
