Mitsubishi Motors gets 56 bn yen syndicated loan

Tokyo, Nov 27: Struggling Mitsubishi Motors Corp said on Monday it had secured a 56 billion yen ($485 million) syndicated loan from a group of financial institutions led by the Bank of Tokyo-Mitsubishi UFJ.

The loan is part of fund-raising plans announced two years ago in a revamped restructuring after DaimlerChrysler AG decided to end financial assistance amid a massive recall scandal, and the Mitsubishi group took the lead in providing help.

The loan, which will help fund the development of cars, is being led by Bank of Tokyo-Mitsubishi UFJ, the core bank in the Mitsubishi UFJ Financial Group Inc. and is being co-managed by the Mitsubishi UFJ Trust and Banking Corp.

The auto maker said it had obtained some 10 percent more in funds than originally sought and added seven new creditors, with 31 firms taking part in the syndicate.

In January 2005, Mitsubishi Motors said it had planned to obtain some 270 billion yen in funding in the period until March 2008.

In addition to the syndicated loan, it has raised about 80 billion yen, including a 50 billion yen loan from the Development Bank of Japan and a bond issue in Thailand.

A company source said, however, that Mitsubishi Motors had not raised as much as originally planned because its funding requirements were not has great as first thought.

The company, currently Japan's only money-losing auto maker, has been in the red for the past three years and is struggling to boost sales worldwide.

It reported a smaller-than-expected net loss in the April-September period as a weaker yen and a one-off gain on investments made up for sliding Asian sales.

It kept its full-year forecast for a return to profit intact but the unchanged projections signify a drastic shortcoming in the auto maker's core business compared with its plans as bigger currency gains and cost cuts are now expected to make up for a downturn in sales.

Mitsubishi Motors' shares were unchanged at 198 yen in afternoon trade compared with a 0.88 percent rise for the Nikkei average.

($1=115.42 Yen)

REUTERS