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TOKYO, Sept 17 (Reuters) - Mizuho Financial Group and other banks are considering about 100 billion yen ($860 million) in aid for Nissan Diesel Motor , the Nihon Keizai daily said on Wednesday, briefly sending shares in the Japanese truck maker to a five-year high.
The newspaper said the package, which would be led by Mizuho group's Mizuho Corporate Bank, would consist mainly of debt-for-equity swaps, and reduce the struggling truck maker's 390 billion yen debt burden by around 25 percent.
Nissan Diesel said it was considering various options to improve its balance sheet but that nothing had been decided.
Investors snapped up its shares anyway, sending them to 260 yen at one point, their highest level since September 1998. The shares, in which trade was suspended for most of the day on the report, ended up 13 percent at 245 yen.
Mizuho Corporate Bank, which has around 95 billion yen in loans outstanding to Nissan Diesel, also said nothing had been decided. The other main lenders, Resona Bank of Resona Holdings Inc and Mizuho Trust & Banking Co, declined to comment.
Nissan Diesel owes Resona Bank about 45 billion yen and Mizuho Trust about 25 billion yen.
Nissan Diesel is one of Japan's weakest truck makers and has suffered a decline in earnings due to prolonged weakness in domestic demand.
But replacement buying of trucks before stricter emissions regulations are introduced next month in some parts of Japan has helped sales surge by double-digits since late last year, contributing to the stock's tripling in value this year.
Shares in rival truck makers such as Isuzu Motors have also made strong gains, also on the back of improved sales.
As part of its turnaround plan, Nissan Diesel has said it aimed to cut interest-bearing debt to 250 billion yen by March 2006 from 387.5 billion yen at the end of March.
The Nihon Keizai said Nissan Diesel now looked set to achieve this target by the end of the current business year ending March, thanks to new aid from its lenders.
NISSAN, RENAULT ON SIDELINES
A spokesman at Nissan Motor Co , which owns 22.5 percent of the truck maker, said he was not aware of any likely announcement in the next week or two, adding that Nissan Motor had little to do with the restructuring of Nissan Diesel's balance sheet.
"That is entirely between Nissan Diesel and the banks," he said. "We watch its balance sheet as an investor, but we have no intention of increasing our exposure to the company."
Nissan Motor, Japan's third-largest auto maker, has various operational tie-ups with Nissan Diesel, including a joint venture to develop small trucks and a partnership in China.
But the auto maker has repeatedly made clear it has no intention of injecting any more cash into Nissan Diesel, in which it already has a 20-30 billion yen exposure in various forms, including equity, convertible bonds and debt guarantees.
French auto maker Renault , which also owns 22.5 percent of Nissan Diesel and 44.4 percent of Nissan Motor, has also largely been a bystander. Its only operational tie-up with the truck maker is an agreement to procure engines for small trucks starting sometime before next March. ($1=116.20 yen)