Mitsubishi Motors plans $2 billion share offer as early as Jan -sources

Sat Oct 26, 2013 2:58am EDT
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By Nobuhiro Kubo and Yoko Kubota

TOKYO (Reuters) - Mitsubishi Motors Corp (7211.T: Quote) plans to raise around $2 billion in a public share offering as early as January to pay back top shareholders for a 2004 bailout that enabled its decade-long turnaround, sources familiar with the matter said on Saturday.

The capital raising will also allow the second-tier Japanese automaker to pay dividends for the first time in nearly a decade and a half. And it will maintain close equity ties to the Mitsubishi group to meet the challenges of tightening environmental standards and other technological advances while it lacks a strategic automotive partner.

It is also a milestone in the company's recovery from a defect cover-up scandal early in the last decade and a retreat from European production to focus on fast-growing Southeast Asia, under the guidance of President Osamu Masuko who arrived from Mitsubishi Corp (8058.T: Quote) in 2005.

Group companies including Mitsubishi Heavy Industries Ltd (7011.T: Quote), Mitsubishi UFJ Financial Group Inc (8306.T: Quote) and Mitsubishi Corp rescued the troubled carmaker in 2004 by taking the bulk of a preferred share offering after a failed tie-up with DaimlerChrysler AG.

Mitsubishi Motors will use the roughly 200 billion yen ($2 billion) it hopes to raise to buy back the majority of those preferred shares at a discounted price and retire them, said the sources, who declined to be named as they were not authorized to speak to the media.

"It was difficult for them to find an alliance partner while the preference shares were hanging over them, but this will let them be a normal company," one of the sources said.

Remaining preferred shares will be converted to ordinary stock.

The 380 billion yen of preferred shares in the hands of Mitsubishi group companies has made it prohibitively costly for Mitsubishi Motors to resume dividend payments.   Continued...

Mitsubishi Motors Corp's vehicles and a passer-by are reflected on an external wall at the company headquarters in Tokyo May 23, 2013. REUTERS/Toru Hanai