TOKYO -- Embattled Mitsubishi Motors Corp. (MMC) received a combined 200 billion yen ($1.83 billion) in aid from J.P. Morgan Chase & Co. and Phoenix Capital on Thursday, bringing its total rescue package to 496 billion yen ($4.5 billion).
Phoenix Capital, a Tokyo-based investment fund with close ties to the Mitsubishi group, paid 74 billion yen to buy common stock for 100 yen each. That compared with a maximum 100 billion yen promised.
Investment bank J.P. Morgan took 126 billion yen in convertible preferred shares, which do not carry voting rights, against the original plan of 100 billion yen.
The purchase amounts were in line with recent media reports.
"MMC has raised new capital of 496 billion yen, which is 46 billion yen more than the recapitalization measures set out in the company's revitalization plan announced on May 21," Japan's fourth-largest automaker said in a statement.
"MMC now has the financial base to vigorously implement its plan."
The final package, however, fell short of the maximum 546 billion yen MMC had said it could gather at the end of June, after it won shareholder approval to issue up to 150 billion yen of shares to J.P. Morgan instead of 100 billion yen.
Debt-ridden MMC desperately needs cash to repay its debt, develop new models and pay for its restructuring, especially after 37 percent-owner DaimlerChrysler AG gave up on its partner's revival in April.
With the share issue, scheduled for Friday, DaimlerChrysler's stake will fall to 24.66 percent, while Phoenix Capital will become MMC's biggest shareholder with 33.28 percent -- just short of the one-third required for a controlling stake.
Mitsubishi group firms would have a combined 23.11 percent.
While the rescue package takes MMC out of any immediate danger, industry watchers said its long-term prospects remained bleak.
"It's all about product at the end of the day," said Marc Desmidt, director of the equities fund management team at Merrill Lynch Investment Managers.
"For Mitsubishi, that's an uphill struggle because it means a combination of regaining trust and producing attractive, value-for-money products."
Underscoring that view, MMC's share price plunged 14 percent to an all-time low of 137 yen on Thursday as sentiment was further hit by news Japan's transport ministry had raided a plant of its truck affiliate over its concealment of defective parts.
"The market is valuing the company at the same price as Phoenix is," Desmidt said. In April, MMC's stock had hit 350 yen.
MMC has promised to return to profit in the business year starting next April through a restructuring that would see it close a plant in Japan and cut its non-factory workforce by 30 percent, among other cost-cutting measures.
But the road to recovery has become rockier as consumer distrust in its brand deepens, fanned by bad publicity involving quality and ethical problems, mostly at Mitsubishi Fuso Truck and Bus Corp., which MMC spun off in 2003.
Revelations that MMC and its unlisted truck affiliate had been hiding defects to prevent official product recalls sank MMC's car sales in Japan by 64 percent in June, while sales in the United States slid 48 percent.
The scandal prompted the government to reject MMC's application two days ago to use a corporate revitalisation law that would allow it to pay lower taxes on the issuance of new shares. The application was accepted on Wednesday.
MMC earlier secured 286 billion yen in aid from sister companies in the Mitsubishi group including Mitsubishi Heavy Industries Ltd. and Mitsubishi Corp., and 10 billion yen from China Motor Corp (CMC).
Nippon Oil Corp., another Mitsubishi group firm, also paid 1 billion yen for new preferred shares on Thursday.
MMC estimated its interest-bearing debt would fall to around 737 billion yen as of last month, from over 1 trillion yen three months before.