P. M. BRIEFING : Cost-Cutting Chrysler Sells 45% of Its Share in Mitsubishi Motors

DETROIT — Chrysler Corp., in the midst of a $1-billion cost-cutting program, today announced it is selling 45% of its share in the Japanese auto maker Mitsubishi Motors Corp. for $592 million.

The company said it would see an after-tax profit of about $310 million, or $1.33 a share, from the sale to 25 Japanese financial institutions. The money goes to Chrysler’s general fund.

“The fact is we didn’t need it to meet the short-term cash needs of implementing our billion-dollar cost-cutting program,” Chrysler Chief Financial Officer Robert Miller said today.

Miller said the money will help fund a five-year product-development program, meet pension obligations and provide more capital for a stock repurchase plan.

“This will just give us an added bit of balance-sheet strength for those purposes,” he said.

The move will reduce Chrysler’s equity in Mitsubishi to 12.1% from 21.8%.

“This has turned out to be a very good investment. By selling, we don’t think the party’s over by any means,” Miller said.

“Our relationship with Mitsubishi Motors Corp. remains as strong as ever and is a critical element of our future plans,” Chrysler Chairman Lee Iacocca said in a news release today. “Given today’s market conditions in Japan . . . we feel that this is a good time to reduce the size of our stake in MMC and realize some significant value for our shareholders.”