Business

MMC secures 165 billion yen corporate aid

Mitsubishi Motors Corp. said Thursday it has received 165 billion yen in financial aid from 12 companies.

The firms, mainly Mitsubishi group companies, bought preferred shares newly issued by MMC to help bolster its capital. The automaker is reeling in the wake of a string of vehicle defect scandals.

Mitsubishi Heavy Industries Ltd., Mitsubishi Corp. and the Bank of Tokyo-Mitsubishi contributed 40 billion yen each, it said.

Mitsubishi Trust & Banking Corp., Tokio Marine and Fire Insurance Co., and China Motor Corp. each provided 10 billion yen.

The proceeds from the share issues will finance a set of streamlining measures MMC announced in late May.

The turnaround plan features payments of retirement benefits associated with personnel cuts, closure of the Okazaki assembly plant in Aichi Prefecture and the relocation of its head office from Tokyo to Kyoto.

MMC is eventually expected to receive a total of 500 billion yen in aid by including planned capital injections by other entities such as Phoenix Capital Co., a Tokyo-based corporate revival fund.

The automaker has seen its earnings fall sharply due to slack sales following the revelation of the defect coverups.

Its new car sales fell 19 percent in April and 56 percent in May year-before levels, apparently due to the firm’s tainted image.

In a related development, 42 of the 47 prefectural governments have dropped MMC and Mitsubishi Fuso Truck & Bus Corp. from their new vehicle procurement lists, according to a recent Kyodo News survey.

Last week, MMC was forced to revise its May turnaround plan, pledging an additional 73 billion yen in cost cuts.

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