Isuzu Motors Ltd.
October 25,2002
October 25,2002
I . Regarding dissolution of joint venture agreement on Subaru-Isuzu Automotive Inc. (SIA)
| Reason for dissolution: | |
| The operating ratio of Isuzu SUV production lines at SIA declined significantly due to a large decline of North American SUV sales volume, making it difficult to maintain manufacturing facilities. | |
| Action included in the dissolution | |
| Isuzu will transfer its entire shareholding in SIA to Fuji Heavy Industries on January 1, 2003. | |
<Additional information for reference>
SIA company profile under current Joint Venture structure:
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Name: | Subaru-Isuzu Automotive, Inc. | |
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Line of business | Manufacture of passenger cars and SUVs | |
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Incorporation: | March, 1987 | |
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Address: | Lafayette, Indiana, the U. S. A. | |
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President/representative director: | Masayoshi, NAGANO | |
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Capital: | US $250 million | |
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Equity position: | Fuji Heavy Industries 51%, Isuzu Motors Limited 49% |
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| (Fuji Heavy Industries to own a 100% equity after share transfer) | |||
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Employees | 3,000 persons | |
II . Regarding subcontracting Isuzu SUV assembly to SIA for North American market
Purpose
To achieve greater efficiency of business operations amid declining sales volume.
Start of production timing
January, 2003
Models to subcontract
Rodeo, Rodeo Sport, Axiom
Annual production volume (plan)
Approximately 30,000 units
To achieve greater efficiency of business operations amid declining sales volume.
Start of production timing
January, 2003
Models to subcontract
Rodeo, Rodeo Sport, Axiom
Annual production volume (plan)
Approximately 30,000 units
| III . | Regarding partial transfer of shares in Isuzu Motors Polsca Sp.zo.o. (ISPOL), Isuzu Motors Germany Gmbh (IMG), and DMAX, Ltd., to General Motors Corporation |
| Purpose | |
| As a part of New 3-year Business Plan, to reinforce collaborative relation with General Motors while improving financial structure. | |
| Conditions of share transfer: | |
| a . | Schedule: To be announced as determined | |||||||
| b . | Percentage equity share to be transferred from Isuzu to GM
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| c . | Profile of companies whose shares be transferred from Isuzu to GM |
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(* A holding company: GM 60%, Isuzu 40%)
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(* A holding company: GM 60%, Isuzu 40%)
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| IV . | Regarding cancellation of shares currently held by GM, without consideration, and the issuance of new shares through third-party allocation to GM |
Cancellation of shares currently held by GM, without consideration
| a . | Name of shareholder and number of shares: General Motors Limited, Number of common shares of stock held by GM: 619,017,000 shares |
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| b . | Date of cancellation: Middle of December, 2002 | |
| c . | Method of cancellation: Cancellation without consideration |
| Issuance of new shares allocated to GM as third-party allocation | |
| Isuzu will issue an aggregate 10.0 billion yen of new shares of common stock (GM will hold approximately 12% equity) in the middle of December, 2002. | |
| Reasons for the cancellation of shares held by GM, the allocation of new shares to GM, and the use of funds | |
| a . | Reason: As a part of New 3-year Business Plan, to reinforce collaborative relation with General Motors while improving financial structure. | |
| b . | Fund usage: Write off cumulative losses, etc. |
V . Regarding reduction of capital equity
Purpose
Appropriate capital to compensate losses, to achieve restoration of financial health.
Gist of capital reduction
| a . | Amount of capital to be reduced: Total 89.8 billion yen will be drawn down from current 90.3 billion yen Shareholders' equity. |
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| b . | Method: Non-refundable capital decrease without consideration. |
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| c . | Schedule: On November 27, 2002, Isuzu plans to call extraordinary shareholders' meeting to submit the matter to this effect. Detail schedule will be notified when available. |
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| d . | Related matters: Other than the cancellation of all the shares currently held by GM, there will be no change in the number of shares (nor reverse stock split or other cancellation).
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VI . Regarding reduction of legal reserve
Purpose
For restoration of impaired capital.
Gist of capital reduction
| a. Capital reserve | 78.6 billion yen (total: 101.2 billion yen) | |
| b. Earned surplus reserve | 9.6 billion yen (total: 9.6 billion yen) |
Detail schedule will be announced when available.
VII . Regarding capital increase through debt-for-equity conversion
Purpose
To enhance net worth of the company, and achieve further reinforcement of financial health.
Procedural gist of debt-for-equity conversion
| a . | Method of conversion: Total 100.0 billion yen of Isuzu debt with five major banks will be converted into equity, of which 50.0 billion yen will be placed into capital and remaining to capital reserve. Equity for debt-conversion purpose will be all in preferred stock. Isuzu Motors has already received agreements from all the five banks. |
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| b . | Schedule: On November 27, 2002, Isuzu plans to call extraordinary shareholders' meeting to submit the matter to this effect. Detail schedule will be notified when available. |
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| c . | Visibility: Implementing the method above, Isuzu makes contract with Mizuho Security as advisory staff to try to be justice. And Isuzu also makes contract with Nomura Security to review the conditions. |
VIII . Regarding new appointment of directors
| To assure unfailing execution of New 3-year Business Plan initiatives, Isuzu will receive personnel dispatch from General Motor and Mizuho Corporate Bank. After shareholders' approval at Extraordinary Meeting on November 27, following individuals will be appointed as Executive Vice President and Representative Director, and Executive Vice President, respectively. |
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