Magyar Suzuki Corporation’s statement
- The General Assembly of the shareholders has decided to carry out a EUR 156 million equity decrease with compensation at Magyar Suzuki Corporation. This means that the company’s shareholders equity will be decreased by 30 %. - In no way will the move have any impact on Suzuki’s production in Hungary; Magyar Suzuki will remain highly over-capitalized, and the company intends to utilize the currently dormant capital more efficiently. - Suzuki Motor Corporation is a global company producing over 3 million cars yearly worldwide having several big development projects, and this fund will be used elsewhere at other projects.
The General Assembly of the shareholders has decided to carry out a EUR 156 million equity decrease with compensation at Magyar Suzuki Corporation (MSC). Suzuki Motor Corporation (SMC) intends to finance projects in its plants outside Hungary from the capital accumulated in its Hungarian subsidiary owing to the Triangulation Trade Business. MSC will remain highly over-capitalized after the equity decrease. Its own capital will remain well over 50 % of its total assets, which is outstandingly high in this sector.
The equity decrease will affect the profit reserves, the capital reserves and the share prices proportionately, and the company’s share capital will be reduced by 30 %. The share capital will be reduced from EUR 302,871,048 to EUR 212,828,304 with the profit reserves reduced from EUR 218,276,866 to EUR 153,383,744 and the capital reserves from EUR 4,634,491 to EUR 3,256,669. As a result, equity will be decreased by 156 million EUR and the company’s share prices will decline from EUR 37 to EUR 26 in face value. After the disinvestment the company’s invested capital will remain close to 10 times the originally invested amount.
The move is a disinvestment of free assets, that is, of ”dormant” capital, and therefore, the transaction will in no way affect the activities of MSC – neither its balance of payments, nor its flow of working capital. The Esztergom plant remains one of the Suzuki Group’s prides, the first Suzuki plant outside Japan to produce a passenger car for the Japanese market.
Magyar Suzuki Corporation carried out an investment of several hundred million euros in preparation for the production of the SX4 S-CROSS and the Vitara, and the company has sufficient capital to finance the developments related to all projects currently in progress. At present, the plant works in two shifts, manufacturing three models. Demand for one of these models, the new Vitara, may increase significantly if the model is successful globally. But even this highly increased demand can be met fully with the plant’s own production capacity, for example, by way of re-starting the third shift.