Mitsubishi Motors plans $2 bln share offer as early as Jan - sources

By Nobuhiro Kubo and Yoko Kubota

TOKYO (Reuters) - Mitsubishi Motors Corp plans to raise around $2 billion in a public share offering as early as January to pay back top shareholders for a 2004 bailout that enabled its decade-long turnaround, sources familiar with the matter said on Saturday.

The capital raising will also allow the second-tier Japanese automaker to pay dividends for the first time in nearly a decade and a half. And it will maintain close equity ties to the Mitsubishi group to meet the challenges of tightening environmental standards and other technological advances while it lacks a strategic automotive partner.

It is also a milestone in the company's recovery from a defect cover-up scandal early in the last decade and a retreat from European production to focus on fast-growing Southeast Asia, under the guidance of President Osamu Masuko who arrived from Mitsubishi Corp in 2005.

Group companies including Mitsubishi Heavy Industries Ltd, Mitsubishi UFJ Financial Group Inc and Mitsubishi Corp rescued the troubled carmaker in 2004 by taking the bulk of a preferred share offering after a failed tie-up with DaimlerChrysler AG.

Mitsubishi Motors will use the roughly 200 billion yen it hopes to raise to buy back the majority of those preferred shares at a discounted price and retire them, said the sources, who declined to be named as they were not authorised to speak to the media.

"It was difficult for them to find an alliance partner while the preference shares were hanging over them, but this will let them be a normal company," one of the sources said.

Remaining preferred shares will be converted to ordinary stock.

The 380 billion yen of preferred shares in the hands of Mitsubishi group companies has made it prohibitively costly for Mitsubishi Motors to resume dividend payments.

MITSUBISHI GROUP

Mitsubishi Heavy, Mitsubishi UFJ Financial and trading house Mitsubishi Corp will retain their combined 34 percent minority controlling stake after the buy back and conversion, the sources said, possibly via a purchase of ordinary shares by Mitsubishi Heavy.

Mitsubishi Motors will announce the move when it makes public its latest multi-year management plan on November 5, one of the sources added. That plan is expected to include expanded production in emerging markets and an expanded lineup of SUVs, which currently include the Outlander Sport.

The company said in a statement to the Tokyo Stock Exchange on Saturday that it was considering various options to deal with its preferred shares but no decisions had been made.

The maker of Triton pickups and i-MiEV electric cars, which sells one-quarter of its vehicles in Southeast Asia, this week raised its net profit outlook for the full year to next March by 40 percent to 70 billion yen, but trimmed its revenue outlook by 6.2 percent to 2.13 trillion yen. It said a boost from a weaker yen and cost cuts offset a drop in vehicle sales.

It will announce its second-quarter earnings on October 29, when Masuko is expected to speak.

Mitsubishi Motors' shares jumped more than 7 percent in intraday trade on Friday in their highest volume in a month and a half, although they pulled back by the close to end with a gain of 1.2 percent at 1,036 yen. They nevertheless outperformed Tokyo's benchmark Nikkei average which sank 2.8 percent.

News that Mitsubishi Motors was considering a share issue and other measures to complete its restructuring first emerged in May. Its shares are up 16 percent so far this year, compared with underperforming shares in other second-tier automakers Mazda Motor Corp and Subaru maker Fuji Heavy Industries Ltd, which are two-and-a-half times their value at the start of the year.

(Additional reporting by Taiga Uranaka, Emi Emoto and Kentaro Sugiyama; Editing by Edmund Klamann and Michael Perry)

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Sensex sheds 137 points during early trade

Mumbai, Oct 23 (IANS) A benchmark index of Indian equities markets tanked 136.96 points or 0.66 percent down in the morning trade Wednesday.

Selling pressure was observed in IT, technology, media and entertainment (TECK) and auto sectors, while marginal good buying was seen in metal sector.

The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 20,875.31 points, was trading at 20,728.01 points in the early session, down 136.96 points or 0.66 percent from previous day's close at 20,864.97 points.

The Sensex touched a high of 20,922.32 points and a low of 20,716.50 points during the trade so far.

The S&P BSE IT index tanked by 156.62 points, TECK dropped by 70.47 points and auto index slipped by 89.24 points; while metal index moved up by 29.88 points.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading down at 44.20 points or 0.71 percent down at 6,158.60 points.

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Portugal to seek precautionary credit line in early 2014

By Jamie McGeever

LONDON (Reuters) - Portugal is seeking to negotiate a precautionary credit line from its international lenders early next year, confident it will not need to resort to a second aid programme, its economy minister said on Monday.

Portugal must return to financing itself in debt markets when its current bailout plan expires in mid-2014. Many economists say it may need some kind of further support from the European Union.

"We still have some work to be done, some progress to be achieved. But our aim is to start negotiating a precautionary programme in the first months of 2014," Antonio Pires de Lima said in an interview with Reuters after hosting a breakfast roundtable with journalists.

For the full Reuters TV interview, click on: http://reut.rs/1azmR7D

The possibility of such a programme was acknowledged when Deputy Prime Minister Paulo Portas said last month that Portugal needed to end its "period of being a protectorate" under the current bailout, and that a standby loan would be a completely different arrangement.

Pires de Lima admitted Portugal has an "issue with perception" by the international community, but dismissed that pessimism as unjustified.

"I really don't think we will need a second (aid) programme," he said at the roundtable, adding that ending the existing programme on time is an "obsession" for his government.

Pires de Lima said he was confident Portugal will meet its budget deficit target of 4 percent of gross domestic product next year, even in the face of potential challenges from the Constitutional Court, which has rejected some of the government's measures to cut the budget.

"I really don't see it (the Court) as a problem," he said.

He also dismissed speculation that Portugal could instead consider a debt exchange later this year in order to capitalise on improved investor demand for its bonds and start tackling its 8.2 billion euros of financing needs for 2014.

"No, no, no. We are completely committed to accomplishing the rescue programme that ends in June (2014)," he told Reuters.

Portuguese 10-year yields have fallen by more than a full percentage point in the last few months to 6.3 percent currently.

"There's still some progress to be done, and part of that progress has to do with the selling of the work we are doing right now in Portugal in the international markets," Pires de Lima said.

He was in London on the first stop of a European roadshow to drum up investment in Portugal. While the economy is recovering - he expects "small" growth in the third quarter to confirm the trend - investment remains well below pre-crisis levels.

The economy grew 1.1 percent in the second quarter, and he predicted rising exports would compensate for a levelling off in domestic consumption, sustaining a recovery.

(Editing by Ruth Pitchford)

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