DaimlerChrysler AG may funnel capital into Mitsubishi Motors Corp. in two stages and thereby convert the struggling automaker into a consolidated subsidiary, sources close to the plan said Monday.
DaimlerChrysler, MMC's biggest shareholder, is expected to provide some 250 billion yen in an initial capital infusion later this year.
The German auto giant may then inject about 150 billion yen worth of capital into MMC a few years later, the sources said.
The first capital infusion will be carried out by purchasing a combination of preferred and common shares to be issued by MMC. Because preferred shares do not affect the stakes of shareholders, DaimlerChrysler's interest in MMC will not exceed 50 percent.
In the second stage, DaimlerChrysler would purchase common shares and boost its stake to more than 50 percent from the current 37 percent, making MMC the first of Japan's largest automakers to become a consolidated subsidiary of a foreign company.
DaimlerChrysler will carry out the second capital injection only after assessing MMC's business recovery, the sources said.
The two-stage capital injection is part of a restructuring plan that DaimlerChrysler and the Mitsubishi group, including Mitsubishi Heavy Industries Ltd., are expected to work out for MMC by the end of the week.
Financial assistance under the plan is likely to total 700 billion yen as it will also involve financial support from the Mitsubishi group. This is up from an initially estimated 500 billion yen.