Shareholders of Mitsubishi Motors Corp. approved Thursday proposals that allow the firm to raise up to 210 billion yen in a public offering to buy back preferred shares and improve its finances.
The automaker will use the funds to purchase about 380 billion yen in preferred shares held by the Bank of Tokyo-Mitsubishi UFJ and other Mitsubishi group companies in order to ease the potential burden of paying relatively high dividends promised for the shares.
By easing the burden and turning its business around, the company aims at resuming dividend payments on common shares it has skipped since September 1997.
After a sales slump caused by the revelation of concealment in 2000 of vehicle defects, the company issued preferred shares and procured a total of 630 billion yen from 14 companies including the bank, Mitsubishi Heavy Industries Ltd., Mitsubishi Corp. and Mitsubishi UFJ Trust and Banking Corp.
President Osamu Masuko said at an extraordinary shareholders' meeting in Tokyo that by purchasing the preferred shares, "We hope to establish a stable business base and proceed to a new growth stage," adding the company aims to achieve its medium-term business plan of posting a group operating profit of 135 billion yen in fiscal 2016.
Mitsubishi Motors is expected to buy most of the preferred shares and the Mitsubishi group companies will convert the remainder of them to common stock so as to keep a stake of more than 34 percent.
At the extraordinary meeting, shareholders approved three proposals including a plan to raise the number of issued shares by 26 percent to about 1,575 million.
The company never paid dividends for the preferred shares but would have faced payments of about 19 billion yen annually as the preferred shares were issued under the condition of distributing 5 percent of the face value in priority to any dividend payouts for common stock.
The automaker plans to decide on resuming dividend payments for common stock at a shareholders' meeting scheduled in June.