Mitsubishi Motors Corp. (7211,MMTOF.PK) intends to use its capital base to cover around 900 billion yen in cumulative losses this financial year, The Nikkei reported. This will lead to resumption of dividends.
A defect cover-up scandal years ago hit the company's earnings badly and the automaker is expected to have cumulative losses of 924.6 billion yen on a parent-only basis as of March 31, 2014.
The plan is to effect an adjustment to accounting categories, so that shareholders will not be immediately affected.
The company also intends to conduct a 1-for-10 reverse stock split and increase the maximum number of shares issuable.
Mitsubishi's capital base and capital reserves are estimated to total about 1 trillion yen. The company's board of directors are expected to finalize resolutions this week for amending the company charter to execute these changes.
The Nikkei report added that the automaker could become undercapitalized if its capital base is reduced, which may prompt it to seek capital ties with other companies.
The stock is falling 2.1 percent in Tokyo at 2,001.00 yen.
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