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TEXT-S&P:M'bishi truck spin off will not affect rating

(Press release provided by Standard & Poor's Corp)

TOKYO, Sept 20 - Standard & Poor's Ratings Services said on Friday that Japan-based Mitsubishi Motors Corp's plan to spin off of its truck and bus business will have no immediate impact on the 'BB-pi' rating on the company.

Mitsubishi Motors announced today that early next year it will spin off its truck and bus business and establish a new company called Mitsubishi Fuso Truck and Bus Corp (MFTBC).

Mitsubishi Motors plans to sell 58 percent of MFTBC's shares-43 percent to DaimlerChrysler AG and 15 percent to Mitsubishi group companies-and will retain the remaining 42 percent ownership.

Through this transaction, Mitsubishi Motors expects to reduce its debt by 330 billion yen ($2.72 billion) as a result of the transfer of 210 billion yen in debt to MFTBC and the 120 billion yen cash inflow from the sale of MFTBC shares.

The debt reduction resulting from this transaction is expected to improve Mitsubishi Motor's weak capital structure to some extent and has a positive implication for Mitsubishi Motors' credit quality.

Stronger ties between Mitsubishi Motors and DaimlerChrysler indicated by DaimlerChrysler's direct investment in MFTBC also supports the rating on Mitsubishi Motors.

Still, given the size of its ownership and the difficult business environment in the commercial vehicle market in Japan, the risk that Mitsubishi Motors may have to extend financial support to MFTBC cannot be ruled out.

Standard & Poor's Ratings Services ($1=121.46 yen)