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Mitsubishi might find assistance from the Japanese government, and Companies in Mitsubishi Group

(following portion, up until photo)
April 24, 2004

The Japanese press has reported that Mitsubishi has been seeking more than $3 billion for its rehabilitation from the Development Bank of Japan, which has helped other troubled Japanese companies in the past. For example, the governmental agency helped with a much smaller $90-million bailout of Daiei Inc., a supermarket chain operator, just two years ago.

Mitsubishi might also turn to Industrial Revitalization Corp. of Japan, or IRCJ. That government-backed body was set up to help struggling companies and recently offered a $3.5-billion assistance package to a cosmetics and textiles company, Kanebo.

It's unclear how the Japanese public would react to a large government-backed bailout of Mitsubishi, because the Kanebo package was criticized. In response, the IRCJ a month ago set up an advisory committee to explore when it is appropriate to provide assistance.

DaimlerChrysler's investors were highly critical of speculation that it would bail out Mitsubishi, noting that the company has been struggling to revive the Chrysler Group in recent years and Mitsubishi has already drained the books.

Mitsubishi's poor performance can be blamed on declining U.S. sales -- they were down 26 percent in 2003 -- and losses from buyers with bad credit in North America. Those accumulated after the company embarked on a free-for-all "0-0-0" financing program strategy in which Mitsubishi offered customers a deal with no money down, zero-percent financing and no payments for a year. Many of those customers couldn't pay when the loans came due.

Mitsubishi has a special shareholder meeting scheduled for next Friday, in which it was prepared to finalize its turnaround plan. The company had said it would seek shareholders' approval to sell about 6 billion new shares, or four times its outstanding shares, to raise money for its plan.

However, in an unexpected announcement Thursday, DaimlerChrysler said it planned "to cease further financial support" of Mitsubishi -- raising the specter that Mitsubishi might collapse and harm numerous joint projects between it and DaimlerChrysler.

Mitsubishi said Friday it would still hold its shareholder meeting but that it would work with its partners on a new business plan that will be finalized within a month.

Also on Friday, rating agency Standard & Poor's slashed its long-term corporate credit rating on Mitsubishi Motors from B-minus to CCC-minus and put the company on CreditWatch "with negative implications."

At the same time, however, S&P concluded the move had no impact on DaimlerChrysler, concluding the developments were only "slightly negative."

"Had the company chosen to increase its involvement in MMC, however, the consequences might have been even more disadvantageous," the rating agency concluded.

Full Article Here


Companies in Japan's Mitsubishi group rallied round Mitsubishi Motors after US-German auto giant DaimlerChrysler pulled the plug on the beleaguered carmaker, throwing a revival plan into disarray.

Japan's biggest heavy machinery maker Mitsubishi Heavy Industries Ltd., major trading house Mitsubishi Corp., and Bank of Tokyo-Mitsubishi said they would do their best to help the automaker mired in debt and recall scandals.

"The three Mitsubishi group firms will continue to do our utmost to revitalize Mitsubishi Motors," they said in a brief joint statement.

The statement followed a surprise announcement by Mitsubishi Motors' top shareholder DaimlerChrysler that its board had decided not to extend much-needed financial aid to Mitsubishi Motors.

Sources close to DaimlerChrysler said the company wanted to dispose of its entire 37 percent stake in MMC, but a DaimlerChrysler spokesman declined to give any immediate comment.

"Mitsubishi Motors, despite the decision by DaimlerChryler, will not face any imminent financial problem," said Seiji Sugiura, an analyst with Nomura Securities.

"Still, anxiety about the future financial position of Mitsubishi Motors will inevitably intensify."

Investors reacted to the news by rushing to sell shares in Japan's only money-losing automaker. MMC's shares failed to trade on Friday after the asking price dropped by the daily limit of 24.9 percent from Thursday's closing quote of 321 yen to 241 yen.

Japanese government ministers said they were also studying the impact of DaimlerChrysler's decision.

The decision "would cause a problem significant enough to affect the very existence of the company," Transport Minister Nobuteru Ishihara told a regular news conference.

Industry Minister Shoichi Nakagawa also said he was keeping a close eye on the situation.

"My understanding was that (MMC) was making progress with its revitalization plan. The industry ministry will carefully monitor the situation," Nakagawa said.

"Together with the major shareholders of the Mitsubishi Group, DaimlerChrysler has tried hard to establish a solid financial structure. However, it was not possible to find a solution leading to an acceptable result for DaimlerChrysler," the US-German automaker said, without elaborating further.

Struggling with debt, MMC has suffered a sharp fall in sales in the United States and foresees an annual loss of some 72 billion yen in the year just ended.

The company has been also mired in recall scandals involving itself and its truck-making affiliate, Mitsubishi Fuso Truck and Bus Corp.

It is scheduled to announce a restructuring plan on April 30.

Full Article Here

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While many others here will disagree with me, but I don't think Mitsubishi is one of those companies that should be gone. Saturn and Isuzu deserve it FAR more.

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Originally posted by RCtennis3811@Apr 24 2004, 11:43 AM
While many others here will disagree with me, but I don't think Mitsubishi is one of those companies that should be gone. Saturn and Isuzu deserve it FAR more.
As Saturn is today and : yes! Tomorrow: who knows?
Isuzu: aren't they rumored to stop selling SUVs to consumers at the end of this year?

Saturn has new products in the pipeline. It's not dead quite yet, but the coffin is all ready, IMO. I hope the new products deliver. VUE has been successful for Saturn, but right now that's all they've got. The ION fell short and the Relay is a temp. stopgap. I hope Saturn/ GM can pull it off, because if Saturn is still doing poorly by the end of this decade, consider it but a small experiment in automotive history. C'mon Saturn, I'm rooting for ya!
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