Mitsubishi Motors Corp. has asked its German partner, DaimlerChrysler AG, Bank of Tokyo-Mitsubishi and other Mitsubishi group firms to provide around 120 billion yen in financial aid to a planned truck and bus subsidiary, MMC officials said Thursday.
MMC plans to set up the subsidiary by spinning off its truck and bus division.
With the spinoff and investment plan, MMC wants to revive the profitability of its truck and bus operations, they said.
In addition, MMC wants to use funds from the Mitsubishi group to reduce its interest-bearing debts, which stood at 1.3 trillion yen as of March 31.
Under the two-stage program, MMC would first hand over production facilities and other resources at its truck and bus division to the subsidiary to finance its plan to acquire an entire stake in the new company, the officials said.
MMC then would sell the entire stake to DaimlerChrysler and Mitsubishi group companies.
MMC wants to limit the equity stake that it and DaimlerChrysler acquire in the truck and bus subsidiary to no more than 40 percent each, so that neither holds a majority stake.
The limitation on the size of the proposed equity stakes is necessary so that the financial results of the subsidiary are not consolidated into those of MMC and DaimlerChrysler.
Other Mitsubishi group firms being asked to invest in the planned subsidiary include trading house Mitsubishi Corp. and Mitsubishi Heavy Industries Ltd.
By having other Mitsubishi group companies invest in the subsidiary, MMC and its group allies want to secure a degree of control over the management of the unit.
For DaimlerChrysler, which has a 34 percent equity stake in MMC, the capital participation in the subsidiary would allow it to bolster its truck and bus operations in Asia on the strength of the high-profile brand of MMC’s pickup trucks.
By strengthening the alliance with DaimlerChrysler, MMC hopes to step up research and development in the field, including that for environmentally friendly technology, while cutting back on related expenses.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.