Mitsubishi Motors Corp. is considering asking its shareholders to approve plans for a 10-for-1 reverse stock split, people having direct knowledge of the matter told Reuters. Mitsubishi is also mulling asking shareholders to approve a capital reorganization plan, a move that would allow the company to resume paying dividends.
The to-be-proposed plans would allow Mitsubishi to clear over JPY920 billion ($8.9 billion) in accumulated losses by reducing capital stock by an equivalent amount. This is considered a typical step for Japanese companies that have had been posting losses but have return to profitability and want to start paying dividends.
The sources told Reuters that while no final decision has been made on the matter, Mitsubishi Motors could announce the first of the steps as early as May 24, 2013, and propose it to shareholders at its annual meeting at the end of June.
The steps under consideration are aimed at closing a chapter that commenced in 2004 when the carmaker was saved by a bailout. Mitsubishi Motors is expecting to post a record operating profit for the fiscal year ending March 2014, helped partly by the depreciating yen.
While the Japanese carmaker continues to enjoy a strong sales position in Thailand and some other countries in Southeast Asia, it has been struggling to post further growth in Europe and the United States. Mitsubishi Motors is planning to transform a plant in Illinois into a hub for exports.