Business

MMC apologizes to shareholders, seeks tax breaks

Mitsubishi Motors Corp. chief executive Yoichiro Okazaki said Tuesday that the company plans to start negotiations with the government in July to receive favorable tax treatment for its revival plan under the Industrial Revitalization Law.

If MMC qualifies for assistance, the company will have its tax payments mitigated when its capital increases.

The struggling automaker said it received 295 billion yen in capital from Mitsubishi Group companies earlier this month and plans to raise more funds by issuing 100 billion yen in common shares to investment fund Phoenix Capital Co. and 150 billion yen in preferred shares to JP Morgan Securities in mid-July.

The total equity increase is expected to amount to around 546 billion yen, compared with the 450 billion yen previously announced in the revival plan in May.

With the issuance of new shares to Phoenix Capital, the investment fund will replace DaimlerChrysler AG, which owns a 37-percent stake, as the top shareholder.

“Although the business situation surrounding the company is very severe . . . we will definitely attain our target of turning the company to the black in terms of net profit in fiscal 2006,” Okazaki told a news conference after the annual shareholders’ meeting held earlier in the day.

The firm said that some 5,000 MMC vehicles exported to Europe are expected to be recalled due to defective parts, but maintained that vehicles sold in the United States do not need to be recalled because they do not have any defective parts.

New board members were approved at the shareholders’ meeting amid harsh criticism from investors over the company’s defect coverup scandals and its plunging auto sales.

MMC has suffered deep losses and sales have plunged in Japan in recent months due to a series of defect coverups involving MMC and Mitsubishi Fuso Truck & Bus Corp., the truck unit MMC spun off in January 2003. DaimlerChrysler now owns a 67 percent stake in Mitsubishi Fuso.

“We apologize for causing trouble over our past wrongdoings,” Okazaki told 382 shareholders who attended the meeting. “But all the employees are committed to do our best to bring the company back to life.”

However, investors’ skepticism over the automaker’s revival plan and its efforts to restore consumer trust lengthened the meeting to three hours, the longest shareholders’ meeting in MMC history.

“There are many vehicles subject to recalls whose defects originate in design flaws,” one investor said during the meeting, asking if MMC can manufacture cars that will sell.

The automaker repeatedly told the gathering that the firm has adopted a new system to avoid design flaws and that its ethics committee will prevent further defect coverups.

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