According to people with direct knowledge of the plan, the Japanese automaker is nearing a decision to raise as much as 200 billion yen ($2 billion) via a public offering of new shares as it seeks to reduce preferred stock held by other Mitsubishi companies.
Mitsubishi could announce this decision after reporting half-year financial results at the end of October, with the sale likely occurring between January and March of 2014, the people said, asking not to be identified because the discussions are private.
After the Nikkei newspaper reported on the planned sale earlier today, the shares fell as much as 8.1%, the most since July 29, and traded at 1,044 yen, down 6.6%, as of 1:21 p.m. in Tokyo.
“This move is necessary before they can become a normal company again or exit from emergency mode,” said Koichi Sugimoto, an auto analyst at BNP Paribas SA in Tokyo. “But they’re still in the very early stages of recovery.”
The public offering would be part of a reorganization involving Mitsubishi UFJ Financial Group Inc., Mitsubishi Heavy Industries Ltd. and Mitsubishi Corp., the people said. Those companies, which bailed out their car affiliate in 2004 and 2005, have been stuck with billions of dollars of preferred shares — convertible into common stock — that never generated any dividends.