Ripplewood Holdings LLC is interested in investing in troubled Mitsubishi Motors Corp., according to sources.

MMC has been trying to muster capital from would-be investors in the aftermath of a decision by its top shareholder, DaimlerChrysler AG, not to inject it with additional capital.

The U.S. investment fund appears to be considering funneling some 100 billion yen into the capital base of the ailing Japanese automaker, the sources said Wednesday.

The exact amount of investment by Ripplewood is still under negotiation among the parties involved, they said.

If Ripplewood were to take an equity stake in MMC, it would represent the first investment in a major Japanese automaker by an investment fund.

Ever since DaimlerChrysler surprised the Japanese business community by announcing April 23 that it had decided against increasing its shareholding in MMC, the Mitsubishi Group has been trying to devise a rehabilitation package under which it can tap the financial resources of group companies, they said.

But the automaker has decided that it needs to secure financial resources even from investment funds if it is to obtain adequate money to finance a large-scale restructuring program, they said.

MMC believes it needs to secure 400 billion yen to 500 billion yen to finance rehabilitation measures, implement restructuring steps, develop attractive automobiles and become profitable.

A 200 billion yen portion of these costs is expected to come from Mitsubishi Group companies, which are ready to buy new shares to be floated by the automaker, they said.

MMC plans to step up negotiations with a range of investment funds, including Ripplewood, they said.

Ripplewood has drawn keen industry attention following a series of investments in ailing Japanese companies.

It earlier purchased the failed Long-Term Credit Bank of Japan, which was nationalized in 1998 by the government and sold in March 2000 to a consortium led by Ripplewood.

The bank was renamed Shinsei Bank before debuting on the first section of the Tokyo Stock Exchange in February.

In addition to Shinsei Bank, Ripplewood invested in auto industry manufacturers such as Niles Co., which had enjoyed close business ties with Nissan Motor Co. as a key parts supplier.

What could scuttle negotiations with Ripplewood is a possible demand by the U.S. fund that Mitsubishi Tokyo Financial Group Inc. and other creditor banks to the automaker waive claims on a large part of loans extended to the firm.

Ripplewood is known for adopting a strict attitude toward the creditor banks of ailing companies in which it may choose to invest.

If Ripplewood assesses the profitability prospects of the automaker in the coming years on a very strict basis, it could demand that Bank of Tokyo-Mitsubishi and other creditor banks forgive large parts of their loans to the automaker, they said.

MMC plans to release its rehabilitation program, featuring a restructuring plan and measures to enhance profitability, later this month.

The automaker has meanwhile been mired in scandal over defective hubs of its large trucks and attempts to cover them up. MMC was also dealt a severe blow by the recent arrest of its former vice president and six other former officials in connection with a wheel separation accident in Yokohama in 2002 that killed a 29-year-old woman.

Police suspect the automaker failed to carry out adequate safety measures, alleging also that the officials had a hand in covering up a series of wheel-hub defects even after the fatal case.

In 2003, some of the seven obtained senior posts at Mitsubishi Fuso Truck & Bus Corp., which was spun off from Mitsubishi Motors in January 2003.

Mitsubishi Motors was embroiled in a separate recall scandal in 2000, under which it hid numerous claims from customers over its defective vehicles.