NYK Purchases Preferred Shares of Mitsubishi Motors Corporation
June 8, 2004
With reference to a request from Mitsubishi Motors Corporation (hereinafter MMC), the board of directors of NYK Line has decided to underwrite preferred shares totaling 2.5 billion yen planned to be issued. This action is taken based on our understanding of their present situation stated below and barring the occurrence of any critical changes.
- Establishment of system to recover trust in society
- Fulfillment of revitalization plan
- Economic rationale for underwriting shares by NYK
That MMC lost considerable trust from consumers and society through repeated misdeeds is regrettable. However, in their business revitalization plan the company has announced the establishment of corporate ethics and a radical reform of the nature and culture of the corporation.
The business revitalization plan calls for, in addition to a complete change of top management, establishment of the Business Ethics Committee composed principally of external experts who will directly advise and report to the board of directors. Furthermore, under observation by this "Eye of Society" committee, MMC inaugurated a Corporate Social Responsibility (CSR) Promotion Office which directly reports to top management. In this way, a structure to thoroughly reinforce the monitoring function and to carry out management reform is implemented in their revitalization plan. At the same time, a Quality Assurance Office was also established to emphasize the principle of "consumer first," "safety first" and "quality first" by centralizing quality assurance and management functions. As a result, we believe that MMC will construct a solid system of corporate governance and compliance for recovering societal trust from now on.
MMC plans to conduct capital strengthening totaling between 450 billion to 500 billion yen through investment by the Mitsubishi Group including NYK and also from outside investors. We believe that with this capital reinforcement, MMC will achieve revitalization through reductions in costs for material and personnel as well as through restructuring of the domestic sales system and strengthening overseas business activities including active development of the Chinese market.
With MMC, NYK has conducted a wide range of business not only concerning transport of manufactured automobiles but also in the global container transportation and distribution business. Thus MMC is one of our most important customers. Further, as we have been the main carrier for MMC for the last 30 years, we determined that by continuing and strengthening the business relationship, appropriate profits can be expected in the future.
From this viewpoint, we find that revitalization of MMC holds significant strategic meaning for our business development and recognize that underwriting preferred stock is an economically viable action.