Is DaimlerChrysler still the majority owner?Mitsubishi Heavy to buy bigger stake in automaker, paper reports
TOKYO - Mitsubishi Motors Corp. (MMC) will become an affiliate of Mitsubishi Heavy Industries Ltd. as part of the group's effort to rescue the ailing auto maker, the Nihon Keizai Shimbun reported on Thursday.
Mitsubishi Heavy, which originally spun off MMC in 1970, would buy another 50 billion yen ($481 million) worth of shares in its sister company, raising its stake to above 15 percent from a little less than 10 percent now.
Its chairman, Takashi Nishioka, would replace Yoichiro Okazaki as MMC's chairman, while Osamu Masuko, a managing director at MMC sent in from trading house Mitsubishi Corp., would become president, unseating Hideyasu Tagaya, the business daily said.
A Mitsubishi Heavy spokesman said nothing had been decided on the reported matter. MMC said the article was based on speculation and declined to comment. Japan's only loss-making auto maker will unveil a new revival plan -- including its second major aid package in eight months -- on Friday.
MMC Chief Financial Officer Hiizu Ichikawa will hold a briefing at 3:45 p.m. (0645 GMT) on Friday. A separate news conference on its revival plan is also scheduled for 5 p.m. (0800 GMT) on the same day.
MMC is struggling to survive after its strategy of offering easy credit to car buyers in its most important U.S. market backfired, leading to billions of dollars in losses from soured loans.
Mitsubishi group companies led by Mitsubishi Heavy, Mitsubishi Corp. and Mitsubishi Tokyo Financial Group Inc. (MTFG) have been leading MMC's rehabilitation after former majority owner DaimlerChrysler AG refused further financial aid last April.
But MMC has been unable to reverse a sales plunge since revelations that it had continued to cover up vehicle defects came to light last year.
Financial sources have said the three core Mitsubishi group firms planned to pour up to 300 billion yen more into MMC. That would be on top of the 496 billion yen MMC received from the group and other investors last year.
The Nihon Keizai said the new capital from the three companies -- including a 50 billion yen debt-for-equity swap by MTFG -- would lift their combined stake in MMC to more than 33.4 percent.
But coming under Mitsubishi Heavy's umbrella would do little more than temporarily restore the financial market's confidence in MMC's financial health, the paper said, and it remained to be seen whether MMC would be able to fix its core business, which is reeling under a weakened brand image.
Its sales in the most important U.S. and Japanese markets sank about 40 percent in 2004.
To cut losses at its underused factories, MMC agreed this month to provide more minicars to rival Nissan Motor Co. in Japan, and is also trying to strike an OEM (original equipment manufacturing) deal with France's PSA Peugeot Citroen
The report sent MMC shares up 2.8 percent to 148 yen in morning trade. Mitsubishi Heavy shares were down 2.1 percent at 283 yen, underperforming a 0.43 percent fall in the benchmark Nikkei average
MMC's shares had lost 5.9 percent on Wednesday after reports that it would widen its loss forecast for the year ending March 31 to as much as 450 billion from 240 billion yen.