Mitsubishi plans to sell new shares to raise up $2.5 billion

Article by Anita Panait, on January 24, 2014

Mitsubishi Motors Corp. is planning to sell new shares at JPY1,120 ($10.73) each to raise up to JPY257.1 billion yen ($2.5 billion). The carmaker is also planning to issue a dividend payment for the first time in over 16 years as part of its reorganization. Mitsubishi Motors will issue up to 241 million shares, including an over-allotment of 23.25 million shares, the carmaker said in a filing.

The proceeds of the share issuance will be used to repurchase preferred stock held by other Mitsubishi companies. Mitsubishi Motors expects its revenue for the fiscal year ending March 31, 2014 to more than double to JPY100 billion as sales surge 16 percent to JPY2.11 trillion.

The share issuance is part of President Osamu Masuko’s reorganization of the company as sales rebound and as the carmaker buys back preferred stock issued to affiliates like Mitsubishi UFJ Financial Group Inc. that granted loans to prevent its collapse a decade ago.

Mitsubishi Motors received bailouts in 2004 and 2005, when its revenues slid after admitting that it covered up defects. These resulted to Mitsubishi UFJ Financial Group Inc., Mitsubishi Heavy Industries Ltd. and Mitsubishi Corp. gaining billions of dollars of preferred shares -- convertible into common stock – but never generated any dividends.

The companies are among the hundreds of Mitsubishi-named yet independent businesses tracing their roots to a shipping company established by Yataro Iwasaki.

Those companies that bailed out Mitsubishi Motors have been seeking to convert their preferred stock since the carmaker’s inability to pay dividends rendered them useless as those shares don’t carry voting rights. Mitsubishi Motors is planning to get rid of all outstanding preferred shares within the current fiscal year.

Topics: mitsubishi, shares

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