Isuzu's shareholders approve plan for reorganization

TOKYO November 28, 2002; Kae Inque writing for Bloomberg reports that Isuzu Motors Ltd., 48.5 percent owned by General Motors Corp., said shareholders approved a plan to cut capital and reserves to cover costs for the truckmaker's program to return to profit and lower debt.

The Tokyo-based company won approval at an extraordinary shareholders' meeting today, to cut its capital by about 62 percent to 55.5 billion yen ($456 million) on Jan. 7, 2003, Isuzu said in a statement. The truckmaker said it will also lower its reserves by about 78 percent to 22.6 billion yen the same day.

Isuzu's shareholders approved the appointment of Basil Drossos, formerly General Motors' vice president of Asia Pacific and India operations, to oversee the truckmaker's reorganization, and of Shigeki Touma, a former Mizuho Corporate Bank Ltd. official, as chief financial officer, the company said.

The Tokyo-based company faces a fourth straight year of losses as the slowing Japanese economy and a reduction in public spending hurts truck demand. The company is also taking charges in part from pulling out of U.S. sport-utility vehicle operations, which it will sell to Fuji Heavy Industries Ltd., its joint venture partner.

Isuzu shares, which have lost almost two-thirds of their value in the past six months, rose 9.1 percent to 36 yen in Tokyo trading. The company's bonds due in 2005 were quoted at 44.381 yen per 100 yen face amount giving a yield of 64 percent, unchanged from yesterday, according to the Japan Securities Dealers Association.

The banks, including Mizuho Corporate, agreed to exchange 100 billion yen of debt for equity last month. They also decided to offer additional funds for bond repayments and to pay for the reorganization plan.

Isuzu said, without elaborating, it decided with the banks on details of the funding and debt-for-equity swap at today's meeting. The banks' support will help Isuzu cut debt to 450 billion yen by March 2005 from 678.2 billion yen at the end of September, it said.

Isuzu said its main banks have agreed to assist in the repayment of a total 56.5 billion yen of bonds in the business years to March 2005 and in the reduction of its inventories, said Isuzu spokesman Tadashi Ioka.

"Isuzu will of course pay back as much of the debt as it can, but our banks have agreed to help with the repayments should we need it," Ioka said.