May 22 (Reuters) - Mitsubishi Motors Corp is taking steps toward resuming dividend payments after nearly a decade-long turnaround bankrolled by other Mitsubishi group companies, according to people with direct knowledge of the plans.
Specifically, Mitsubishi Motors is considering asking shareholders to approve plans for a 10-for-1 reverse stock split, the sources said.
At the same time, Mitsubishi is considering whether to ask shareholders to approve a capital reorganisation, a change in accounting that would make it possible to resume dividend payments.
The plan under consideration would clear the company’s more than 920 billion yen ($8.9 billion) in accumulated losses by reducing capital stock by an equivalent amount, a common step for Japanese companies with a history of deep losses that have returned to profitability and want to begin paying dividends.
A spokesman for Mitsubishi Motors said the company had no immediate comment.
No final decision has been made but Mitsubishi Motors could announce the first of the steps as soon as Friday and put it before shareholders at the annual meeting at the end of June, according to the sources.
Taken together, the steps under consideration are intended to close a chapter that began with a 2004 bailout for Mitsubishi Motors.
Over the past decade, Japan’s seventh-largest automaker has struggled with failed tie-ups with Daimler AG and Chrysler, quality and safety problems and the costs of being a niche player in the global market for cars and light trucks.
Mitsubishi Motors forecast a record operating profit for the financial year to next March, helped in part by a weaker yen. Shares in the company have gained over 260 percent since the end of November to 183 yen at Wednesday’s close.
Although Mitsubishi has a strong position in Thailand and other Southeast Asian markets it has struggled in Europe and the United States, where it operates a plant in Illinois it hopes to use as a hub for exports.
Osamu Masuko, who has served as Mitsubishi Motor’s president for 10 years, said in late April he wanted to see the automaker move toward resuming dividend payments.
“As we work through our plan, I want to resolve a question that has been pending for many years and set a time frame for the resumption of dividends,” Masuko told reporters.
Mitsubishi group companies - including MUFJ, Japan’s largest bank, Mitsubishi Corp, and Mitsubishi Heavy Industries, the three architects of the Mitsubishi Motors rescue - control 34 percent of the automaker’s voting shares.
Mitsubishi group companies stepped in to rescue Mitsubishi Motors in 2004 by taking the bulk of a preferred share offering. The rescue plan came after the company’s then-president and other employees were implicated in systemically covering up safety defects.
Mitsubishi Motors’ best-selling models on a global basis are the Triton pickup truck and the small SUV sold as both the RVR and Outlander Sport. Global sales were down 1 percent in the past fiscal year to 987,000 vehicles.