Nissan Diesel Motor Co. has begun negotiations with Mizuho Corporate Bank, Nissan Motor Co. and other lenders on a bailout plan, sources said Wednesday.
The package to assist the struggling major truck manufacturer is expected to center around debt-for-equity swaps, in which financial institutions would forgive debts worth about 100 billion yen in exchange for Nissan Diesel shares equivalent to the obligations, the sources said.
Other shareholders may also offer assistance in the form of capital reductions as the parties involved try to map out a concrete package by the end of this month, they said.
Nissan Diesel, a unit of Nissan Motor, had interest-bearing debts of about 390 billion yen as of March 31. An earlier restructuring program was designed to cut the amount to 250 billion yen by March 2006 through the company's own efforts.
In recent months, truck manufacturers have enjoyed exceptionally robust replacement demand ahead of the Oct. 1 introduction of stricter emissions standards.
But they have found themselves mired in a saturated market, which has led many to anticipate an industrywide shakeup after the demand subsides.
The Nihon Keizai Shimbun reported in its Wednesday morning edition that Nissan Diesel had 47 billion yen in accumulated losses at the end of March, pushing down its shareholders' equity as low as 3.5 billion yen and nearly plunging it into negative net worth.
Industry analysts said the size of Nissan Diesel's cumulative losses is considered the bottleneck in the realignment of the truck industry, particularly for the firm's potential capital-tieup partners.
Nissan Diesel posted consolidated sales of 381.3 billion yen and a net loss of 3.3 billion yen for the year ended March 31 due to prolonged weakness in demand.
Renault SA and Nissan Motor are the largest joint shareholders in the company, each with a 22.5 percent stake.