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Analysts and investors gave a positive reaction to Mitsubishi UFJ's (MTU) news that it will be selling preferred shares in order to pay off debt it owes to the government as part of its acquisition last year of UFJ. It is expected the preferred shares will be issued this Friday and they will not be convertible. In addition, MTU will buyback up to 210 billion yen of shares owned by the government. The first buyback will happen tomorrow prior to the market's open with 120,000 shares being bought back at today's closing price of 1,750,000 yen per share.

According to Bloomberg coverage, the up to 500 billion yen (US$4.3b) of preferred stock to be sold in order to pay off debt amounts to over half of the 820.5 billion yen it owes and which it plans to pay back by March 2007. The debt is actually from the government's bail out of UFJ in 1999, which Mitsubishi assumed when it acquired UFJ last year.

For more details see this article by Bloomberg and the press release in PDF format by Mitsubishi UFJ.

Mitsubishi UFJ ADRs (NYSE:MTU) reached an all-time intra-day high today and may also close at an all time high. Its shares in Japan (ticker: 8306) closed at an all-time high of 1,750,000 yen up 2.94% on the day.

Mitsubishi UFJ's full-year dividend for 2006 was increased by a 1,000 yen to 7,000 yen earlier this month. ADRs were originally issued at a ratio of 1000:1 to ordinary shares.

MTU 1-yr chart:

Source: Mitsubishi UFJ Financial Group Heading in the Right Direction (MTU)