Mitsubishi Motors to sell Western Europe Netherlands car plant for €1($1.23): Stipulations to retain all 1500 employees

Japanese automakers Mitsubishi Motors is selling their Netherlands car plant lock, stock and barrel all for the price of €1 to busmakers VDL. The price may be ludicrous but this is being done with the sole intention to safeguard the jobs of their NedCar 1500 employees who would otherwise have had to fend for themselves. One of the terms of sale is that VDL will have to retain all Mitsubishi Motors’ employees as the plant winds up production activities at the end of this year.

This plant used to manufacturer Colt subcompact and Outlander SUV but with demand on the downswing all across Europe, the automaker has decided to sell to VDL. VDL originally into bus building is now branching into production of small cars and had earlier narrowed down to using the BMW facilities.

Sale of the Netherlands plant will enable Mitsubishi Motors to concentrate on emerging markets where growth is guaranteed unlike in developed countries across the globe which is seeing a steady stagnation. Mitsubishi Motors have set up new production activities in Indonesia and Thailand and are gearing up to increase production in Brazil and China. Euro Zone debt crisis and depleting customers’ demands are making it difficult for a number of automakers besides Mitsubishi Motors to stay ahead. Mitsubishi Motors sales across Europe have slipped drastically since the past one year.

News release: Notice regarding conclusion of a principal agreement on share transfer of the European subsidiary production site

Mitsubishi Motors Corporation (MMC) announced today it has signed a principal agreement regarding the share transfer of its subsidiary European production site Netherlands Car B.V. (NedCar; Born, the Netherlands, wholly-owned subsidiary of MMC group) with VDL Groep B.V. (VDL; Eindhoven, the Netherlands). Based on this agreement, MMC will hereafter further proceed with the negotiations with VDL to reach a final contract with the company on the transferring of NedCar shares.

1. Reasons for the share transfer

As previously announced on February 6, 2012, to respond to the wildly fluctuating operating environment which automobile manufacturers currently face, MMC reviewed its global production operation structure and accordingly has made a decision not to allocate a new model to be produced at NedCar from 2013 and beyond. Since then, MMC had carried out discussions with the related parties to explore the possibility of the future continuation of NedCar while making it a top priority to assure the employment of its entire employees. As a result, MMC has reached a principal agreement with VDL on the share transfer.

2. Outline of Netherlands Car B.V.
(1)NameNetherlands Car B.V.
(2)Head office locationBorn, Limburg, the Netherlands
(3)RepresentativeChairman & CEO: Mr. Tetsuro Miki

President & COO: Mr. Joost Govaarts

(4)BusinessManufacturing of automobiles and other parts
(5)Share capitalEUR 250,012 thousand
(6)Date establishedDecember 1, 1991
(7)Consolidated net assetsEUR 492,695 thousand(as of end of December, 2010)
(8)Consolidated total assetsEUR 674,186 thousand(as of end of December, 2010)
(9)Major shareholders and shareholding ratioMitsubishi Motors Corporation: 85%

Mitsubishi Motors Europe B.V.: 15%

3. Outline of the party whom the NedCar shares are planned to be transferred
(1)
Name
VDL Groep B.V.
(2)
Head office location
Eindhoven, North Brabant, the Netherlands
(3)
Representative
President: Mr. Wim van der Leegte
(4)
Business
Development, production, and sales of semi-manufactured products, buses, and other goods
(5)
Share capital
EUR 50,000 thousand
(6)
Date established
December 14, 1953
(7)
Major shareholder and shareholding ratio
Wim van der Leegte, 100% family owned
4.Number of shares planned to be transferred, transfer price, and held shares after planned completion of transfer
(1)
Number of shares before transfer
Mitsubishi Motors Corporation: 468,308 shares
(Percentage held: 85%)
Mitsubishi Motors Europe B.V.: 82,642 shares
(Percentage held: 15%)
(2)
Number of shares to be transferred
550,950 shares (Percentage in issued shares: 100%)
(Transfer price: EUR 1)
(3)
Number of held shares after transfer
0 share
(Percentage held: 0%)
Once the share transfer is to be executed, a loss of approximately 28 billion yen is estimated  to be incurred, which will be recorded in fiscal year 2012 (ending March 2013).
5. Schedule
(1)
Date of corporate resolution
By the end of August 2012 (scheduled)
(2)
Date of contract for share transfer
By the end of August 2012 (scheduled)
(3)
Date of share transfer
By the end of December, 2012 (scheduled)