TOKYO -- Mitsubishi Heavy Industries, currently the biggest shareholder in Mitsubishi Motors, will hold onto its stake in the automaker that Carlos Ghosn is seeking to turn around following a fuel-economy test scandal.
The maker of power plant equipment, aircraft and ships will refrain from selling its holdings in Mitsubishi Motors even as it plans to raise 200 billion yen ($1.9 billion) for other businesses by selling shares and real estate, Masanori Koguchi, chief financial officer at Mitsubishi Heavy, said in an interview in Tokyo on Monday.
Last month, Nissan and Renault CEO Carlos Ghosn rescued Mitsubishi Motors by agreeing to buy 34 percent of the company.
"We're not thinking of doing anything soon" with our Mitsubishi Motors shareholdings, Koguchi said, adding any action this year or next would be unlikely. "Its shares are low at the moment. We want to see what happens when things settle down," he said, when asked if the company had any intention to sell later.
Mitsubishi Motors shares have plunged to record lows and are 40 percent down since the automaker admitted in April to overstating the fuel economy of its minicars and improperly testing other models as far back as 1991. Ghosn seized the moment to gain significant control of the company with the $2.2 billion deal that is set to close in October. At present, Mitsubishi Heavy owns 12.6 percent of the embattled vehicle maker, according to data compiled by Bloomberg.
After overstating the fuel economy of its minicars by as much as 10 percent, Mitsubishi Motors faces the prospect of compensating owners of those vehicles for their shortcomings in performance. It also may have to pay back Japan's government for tax rebates that its minicars shouldn't have been eligible for.
The transaction with Nissan eases concerns about the viability of the Japanese automaker, which has dealings with 7,777 companies affecting 410,000 people, according to Teikoku Databank Ltd. estimates. Mitsubishi Motors has enough cash to handle the compensation and costs related to the cheating scandal, Chairman Osamu Masuko said last month. The company doesn't foresee any financial shortage as a result, he said.
After the deal is completed, Nissan will wield veto power over major decisions at Mitsubishi Motors. The combined shareholding of Mitsubishi Group companies -- Mitsubishi Heavy, Mitsubishi Corp. and Mitsubishi UFJ Financial Group Inc. -- will fall to 22.4 percent from 34 percent, according to Mitsubishi Motors.
Mitsubishi Heavy is seeking to raise funds after delays in building cruise ships cut annual net income to the least in four years. The development of its regional jet also raised costs.