By Kentaro Sugiyama and Yoko Kubota
TOKYO (Reuters) - Mitsubishi Motors Corp <7211.T> is taking steps toward resuming dividend payments after nearly a decade-long turnaround bankrolled by other Mitsubishi group companies, according to people with direct knowledge of the plans.
Specifically, Mitsubishi Motors is considering asking shareholders to approve plans for a 10-for-1 reverse stock split, the people said. At the same time, the company may ask shareholders to approve a capital reorganization - a change in accounting that would make it possible to resume paying dividends.
The plan under consideration would clear Mitsubishi Motors' more than 920 billion yen ($8.9 billion) in accumulated losses by reducing capital stock by an equivalent amount, a common step for Japanese companies with a history of deep losses that have returned to profitability and want to begin paying dividends.
A spokesman for Mitsubishi Motors said the company had no immediate comment.
No final decision has been made but Mitsubishi Motors could announce the first of the steps as soon as Friday and put it before shareholders at the annual meeting at the end of June, according to the sources.
Taken together, the steps under consideration are intended to close a chapter that began with a 2004 bailout for Mitsubishi Motors.
Shares in Japan's seventh-biggest automaker by sales volume fell 11.5 percent on Thursday to 162 yen - set for its biggest one-day drop in more than 2 years. The stock had risen about 25 percent within a week.
Over the past decade, Mitsubishi Motors has struggled with failed tie-ups with Daimler AG
Mitsubishi Motors expects a record operating profit for the financial year to next March, helped in part by a weaker yen. Shares in the company gained about 140 percent from mid-November to early Thursday.
Although Mitsubishi has a strong position in Thailand and some other Southeast Asian markets it has struggled in Europe and the United States, where it operates a plant in Illinois that it hopes to use as a hub for exports.
Osamu Masuko, who has served as Mitsubishi Motors' president for 10 years, said last month he wanted to see the automaker move toward resuming dividend payments. "As we work through our plan, I want to resolve a question that has been pending for many years and set a timeframe for the resumption of dividends," Masuko told reporters then.
Mitsubishi group companies - including MUFJ <8306.T>, Japan's largest bank, Mitsubishi Corp <8058.T>, and Mitsubishi Heavy Industries <7011.T>, the three architects of the Mitsubishi Motors rescue - control 34 percent of the automaker's voting shares.
Mitsubishi group companies stepped in to rescue Mitsubishi Motors in 2004 by taking the bulk of a preferred share offering. The rescue plan came after the company's then-president and other employees were implicated in systemically covering up safety defects.
Mitsubishi Motors' best-selling models on a global basis are the Triton pickup truck and the small SUV sold as both the RVR and Outlander Sport. Global sales dipped 1 percent in the past fiscal year to 987,000 vehicles.
($1 = 103.5050 Japanese yen)
(Additional reporting by Nobuhiro Kubo; Writing by Kevin Krolicki and Phil Berlowitz; Editing by Ian Geoghegan)