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Last Updated: Friday, 28 January, 2005, 11:14 GMT
Mitsubishi seeks $5.2bn bail out
Mitsubishi car sales fell more than 40% during 2004
Troubled Japanese carmaker Mitsubishi Motors is seeking a fresh 540bn yen ($5.2bn; 2.77bn) in funding as it tries to turn itself around.

As part of the plan, three other firms in the Mitsubishi group are to make a combined cash injection of 270bn yen, mainly through buying new shares.

In addition, Mitsubishi Motors is aiming to raise an extra 270bn yen, including 240bn yen in new loans.

The announcement came as the carmaker made another profits warning.

It now forecasts a deeper net loss of 472bn yen for the year to March 2005, compared with the 240bn yen net loss projected earlier.

It expects to sell 1.337 million vehicles in the 12 months to March 2005, 190,000 less than in the previous financial year.

The carmaker had previously forecast sales of 1.4 million for this year.

Taking responsibility

It also announced on Friday that its three top executives are to stand down to make way for a fresh start - chairman and chief executive officer Yoichiro Okazaki, vice chairman Koji Furukawa and president and chief operating officer Hideyasu Tagaya are all to leave.

Takashi Nishioka, currently chairman of Mitsubishi Heavy Industries, will take over as chief executive at Mitsubishi Motors.

Mitsubishi has been hit by falling sales, a recall scandal and the decision in April last year by 30% shareholder US-German car firm DaimlerChrysler's not to pump in any more money.

The intended 540bn yen of new funding is the third bailout for Mitsubishi Motors since last May.

The 270bn yen confirmed from within the Mitsubishi group of companies will come from Mitsubishi Heavy Industries, Mitsubishi Corp, and Mitsubishi Tokyo Financial Group.

Mitsubishi Motors also hopes to secure the loan from within the wider Mitsubishi group, aiming to borrow 240bn yen from Mitsubishi Tokyo; and plans an asset sale worth 30bn yen to Mitsubishi Corp.

French connection

There was, however, some good news for Mitsubishi Motors on Friday, with the announcement that it is close to doing a deal with French car maker Peugeot to cooperate on developing a new sports utility vehicle.

Peugeot said in a statement: "The negotiation is at an advanced stage."

It added that Peugeot's chief executive planned to go to Japan next week to finalise the deal.

Mitsubishi's sales have slid 41% in the past year, catalysed by the revelation that the company had systematically been hiding records of faults and then secretly repairing vehicles.

Mitsubishi in Peugeot link talks
11 Jan 05 |  Business
Nissan eyes troubled Mitsubishi
06 Dec 04 |  Business
Mitsubishi gets pledge of support
03 Dec 04 |  Business
Mitsubishi crashes into the red
08 Nov 04 |  Business

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