Mitsubishi Motors' Business Plan Details

TOKYO, May 21, 2004; Reuters reported that Japan's Mitsubishi Motors Corp (MMC) announced on Friday details of a much-awaited medium-term business plan that centres on a financial aid package worth 450 billion yen ($4 billion).

Following are the details of the announcement:

FINANCIAL

-- MMC said it was targeting a return to recurring profit in the next business year, which ends in March 2006, and it would return to a net profit in the following business year through March 2007.

-- MMC's targets for the 2006/07 business year are operating profit of 120 billion yen, recurring profit of 100 billion yen, net profit of 70 billion yen on sales of 2.49 trillion yen.

-- Of the 450 billion yen aid, 270 billion yen will come from Mitsubishi group firms, 10 billion yen from MMC's strategic partner China Motor Corp (CMC), and 170 billion yen from the market. -- MMC's three main group shareholders, Mitsubishi Heavy Industries Ltd, Mitsubishi Corp and the Bank of Tokyo-Mitsubishi (BTM), together with other group firms, will buy 140 billion yen in preferred shares.

-- BTM and Mitsubishi Trust & Banking Corp, both of the Mitsubishi Tokyo Financial Group (MTFG) (Tokyo:8306.T - News), will exchange a combined 130 billion yen of MMC debt into equity.

-- As for funds procured from the market, Phoenix Capital, a Tokyo-based investment fund with close ties to the Mitsubishi group, will buy 70 billion yen of common shares and JP Morgan Morgan Chase will buy 100 billion yen of preferred shares.

The common stock is expected to be issued at around 100 yen per share, making the number of new shares issued around 700 million. That will make Phoenix Capital the biggest shareholder in MMC.

-- MMC will use 130 billion yen of the funds to cut debt and 320 billion yen will go towards revitalizing the company's operations.

OPERATIONAL

-- MMC will close its Okazaki plant in Japan by the end of 2006/07, cutting the number of its domestic car plants to two.

-- MMC will close its engine plant in Australia in 2005/06 and reduce the capacity of its assembly plant there.

-- MMC will slash 30 percent of its global non-manufacturing workers to 18,800 by March 2007 from the current 26,400.

-- MMC will cut the number of executives to 37 from 51 by the end of next March.

-- MMC will reduce the number of vehicle platforms to six from 15 by 2010.

-- MMC will launch a new strategic car for Asia to enhance the product lineup.

-- MMC said it would keep its alliance with DaimlerChrysler based on what is deemed economically viable for both companies. Ongoing projects will continue as planned.

-- MMC will appoint Hideyasu Tagaya, an executive officer who has been overseeing MMC's international operations, as president and chief operating officer to support CEO and Chairman Yoichiro Okazaki, effective June 29