DaimlerChrysler declines to give more cash to struggling partner

One analyst said the company may 'vanish' if it doesn't get more funding.
TOKYO (AP) -- Burdened with a multibillion-dollar debt, plunging car sales and a spate of recalls, Mitsubishi Motors Corp., suffered a major blow today when partner DaimlerChrysler AG ruled out pumping more cash into the Japanese automaker.
Shares in Mitsubishi Motors plunged in Tokyo, finishing down 25 percent, the day's allowed limit, to $2.20 after DaimlerChrysler said it had "decided not to participate in a capital increase" planned by the Japanese automaker.
The news killed off speculation that the German-U.S. automaker would unveil a revival plan that would include hundreds of billions of dollars of additional cash.
"This is a disaster for Mitsubishi Motors," said Koji Endo, auto analyst at Credit Suisse First Boston in Tokyo. He said the automaker probably was scrambling to find another partner.
"The company is about to vanish if things continue this way," he said.
But the news sent DaimlerChrysler's stock price up 7.3 percent in morning trading on the Frankfurt stock exchange to $46.10, reflecting market sentiments that the move was sensible for DaimlerChrysler.
DaimlerChrysler spokesman Thomas Froehlich said from the company's Stuttgart headquarters that a decision had not yet been made on what it will do with its 37 percent stake in Mitsubishi Motors.
Standard & amp; Poor's Ratings Services downgraded its long-term corporate credit rating on the automaker to "CCC-" from "B-" citing heightened debt risks. Mitsubishi Motors is shouldering $10.4 billion in debts.
The Mitsubishi group of companies -- major shareholders that make up a powerful conglomerate with roots in the 1800s -- was stunned. A joint statement said the companies were looking into DaimlerChrysler's announcement, which came as a surprise in the midst of talks between the companies to hammer out a revival plan together.
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