TOKYO (Kyodo) -- Hino Motors Ltd., Toyota Motor Corp.'s truck-making subsidiary, said Thursday that it has reached a settlement with U.S. authorities over fraudulent emissions data reporting, agreeing to pay about $1.2 billion in penalties.

The development could advance Hino's ongoing merger talks with Mitsubishi Fuso Truck and Bus Corp., which have stalled due to the issue, observers said. The two companies reached an agreement in 2023 to aim to integrate by the end of 2024.

Under the settlement with the U.S. Department of Justice, Hino said it has agreed to "enter a guilty plea and pay criminal penalties," as well as resolve civil claims.

Hino has projected a consolidated net loss of 220 billion yen ($1.4 billion) for the fiscal year ending in March, saying the impact of the settlement on its business remains under review.

"This resolution is a significant milestone," Hino CEO Satoshi Ogiso said in a statement. "We deeply apologize for the inconvenience caused to our customers and stakeholders."

The issue came to light in 2022 as the company admitted to submitting fabricated emissions and fuel economy data to transport authorities. It has also agreed to settle class action lawsuits in Australia, the United States and Canada.