Mitsubishi Heavy Industries, Ltd. (MHI) will increase the capitalization of Mitsubishi Aircraft Corporation (Mitsubishi Aircraft), its wholly owned company to bring it out of the red as it nears the first delivery of the Mitsubishi Regional Jet (MRJ), a program plagued by delays and financial woes.
MHI will add 170 billion yen (US$1.5 billion) to Mitsubishi Aircraft 's capital, and cancel 50 billion yen of the total debt owed by Mitsubishi Aircraft to MHI. The added capital will bring Mitsubishi Aircraft out of its capital deficit and provide the company with funds to enable continued development of the MRJ, a MHI release said.
As of March 31, 2018, the company's liabilities exceeded assets by 110 billion yen. With the 170 billion yen to be acquired from MHI, Mitsubishi Aircraft will allocate 85 billion yen to its capital and an equal amount to its capital reserve.
Simultaneously, MHI will cancel 50 billion yen of the total debt owed to it by Mitsubishi Aircraft. The infusion of 170 billion yen will increase Mitsubishi Aircraft's paid-in capital from 100 billion yen to 270 billion yen.
The capital infusion from MHI will be allocated mainly to development of the MRJ90 and to future expenditures borne by MHI in preparation for commercialization.
Business results and the financial status of MHI's Group companies are continuously factored into the Company's consolidated financial statements. The capital increase in Mitsubishi Aircraft indicated here will have no impact on MHI's consolidated results.
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