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Business deals

Mitsubishi to send 30 managers to rebuild plant builder Chiyoda

Trading house's third bailout will keep affiliate on shorter leash

A Chiyoda liquefied natural gas plant in Qatar. The plant engineering company hopes for synergy with Mitsubishi Corp.'s global LNG operations. (Photo courtesy of Qatargas)

TOKYO -- Trading house Mitsubishi Corp. said Thursday that together with MUFG Bank it will extend a total of 180 billion yen ($1.63 billion) in funding to Chiyoda, and send about 30 executives and managers, as part of an effort to help the plant-engineering company recover from recent massive losses.

Mitsubishi said it will purchase 70 billion yen in preferred shares through a private allotment and lend another 90 billion yen. MUFG Bank, an arm of megabank Mitsubishi UFJ Financial Group, will provide an additional 20 billion yen in loans under a plan released by Chiyoda that day.

"We will extend both money and personnel," Mitsubishi President and CEO Takehiko Kakiuchi told reporters Thursday. "We're confident that a turnaround is possible."

The roughly 30 managerial-level staffers will be sent to Chiyoda by July.

Chiyoda, one of the world's top builders of liquefied natural gas plants, reported Thursday that liabilities exceeded assets by 59.2 billion yen. It originally sought support from Mitsubishi Heavy Industries, but the industrial giant refused as it was preoccupied with issues including its long-delayed Mitsubishi Regional Jet project.

Chiyoda ultimately took the lifeline from top shareholder Mitsubishi Corp. -- its third bailout by the trading house -- partly in hopes of generating synergies with Mitsubishi's global LNG business.

But there is a view within the company that it is partly to blame for not intervening more aggressively. The rehabilitation plan suggests that it does not intend to make the same mistake again.

Mitsubishi will solidify control of Chiyoda's leadership through personnel moves. Current President and CEO Masaji Santo -- sent from the trading house in 2017 -- will become president and chief operating officer, while Kazushi Okawa, a Mitsubishi adviser and former head of its machinery group, takes over as chairman and CEO. A number of directors who came up from within Chiyoda will be pushed out.

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