TOKYO, Oct 23 (Reuters) - French auto maker Renault SA will do its part in a rescue plan for embattled Nissan Diesel , returning 5.625 percent of Nissan Diesel's shares for free, the Japanese truck maker said on Thursday.
Nissan Diesel, which last month received a 106 billion yen ($973 million) bail-out from its banks and other major shareholder Nissan Motor Co , said it planned to cancel the stock after a board meeting on November 27.
The truck maker has been struggling under a mountain of interest-bearing debt left over from the bubble years of the 1980s after which the domestic truck market sank.
At 390 billion yen, the debt is roughly equal to its revenues last year.
The transfer reduces Renault's holding in Nissan Diesel to 16.87 percent from 22.5 percent, although after the cancellation of the stock Renault's stake will rise to 17.88 percent.
Nissan Motor's stake in the truck maker, now at 22.5 percent will rise to 23.84 percent after the cancellation.
Japan's stagnant truck market has long been considered too small for the nation's four truck makers, Nissan Diesel, Isuzu Motors , Hino Motors and unlisted Mitsubishi Fuso Truck and Bus Co.
Analysts have said that while the latest rescue effort would help pull Nissan Diesel back from the brink, the long-term future of the company depends on how the domestic market holds up.
Under last month's aid plan, Mizuho Corporate Bank , Mizuho Trust & Banking and Resona Bank will swap 90 billion yen of loans to Nissan Diesel for preferred shares.
Nissan Motor will provide 16 billion yen by swapping debt and convertible bonds into preferred equity.
Prior to the announcement, Nissan Diesel's shares closed down 4.55 percent at 210 yen, in line with a fall of 5.09 percent on the Nikkei average . ($1=108.95 yen)