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Mitsubishi Motors weighs public offering, other options - sources

TOKYO (Reuters) - Mitsubishi Motors Corp (TYO:7211) is considering various options including a public share offering as it seeks funding to buy back preferred shares from other Mitsubishi companies, in a move that would mark its emergence from a decade of financial support, sources said.

The capital increase could allow the automaker, Japan's sixth biggest by sales volume, to pay back its biggest shareholders for a 2004 bailout and resume dividend payments after a decade and a half.

People familiar with the situation, who asked not to be named, said that Mitsubishi Motors is in the early stages of studying a potential share offering and that key details, including the amount, were not yet decided.

The Nikkei business daily reported earlier on Thursday that Mitsubishi Motors would offer about 200 billion yen (1.26 billion pounds) in shares to the public during the financial year ending in March 2014.

Shares in the maker of Triton pickups, the Outlander Sport SUV and the i-MiEV electric car fell as much as 8.1 percent after the report and were down 6.7 percent as of 5:18 a.m.

"While Mitsubishi Motors is considering various measures regarding the treatment of preferred stock, there has been no decision made," company spokeswoman Namie Koketsu said.

For Mitsubishi Motors to resume dividend payments, it must first decide how to deal with around 380 billion yen ($3.8 billion) in preferred shares held by other Mitsubishi group companies.

Group companies including Mitsubishi UFJ Financial Group Inc <8306.T>, Mitsubishi Corp <8058.T> and Mitsubishi Heavy Industries Ltd <7011.T> rescued the troubled carmaker by taking the bulk of a preferred share offering in 2004 after a failed tie-up with DaimlerChrysler AG.

Unless these are converted into ordinary stock, Mitsubishi Motors will simply end up paying dividends to those companies. But any conversion would dilute the value of ordinary shares.

Resolving the issue of preferred shares and paying back the group companies would be a huge step for President Osamu Masuko, who has led the company since 2005.

In the last financial year ended March 2013, Mitsubishi Motors posted a record net profit of 38 billion yen. It is forecasting a further rise in net profit to 50 billion yen for this financial year.

(Reporting by Emi Emoto, Taro Fuse, Yoko Kubota and Taiga Uranaka in Tokyo and Krithika Krishnamurthy in Bangalore; Editing by Maju Samuel and Chris Gallagher)