The Wall Street Journal: Pioneer Corp. said it will receive 2.5 billion yen ($25.8 / €19.7 million ) of fresh capital from business partner Honda Motor Co. in the first of a series of fundraising steps planned by the electronics maker to finance its overhaul.
Pioneer, a maker of car navigation systems and electronics products, said it plans to issue new shares to Honda by the end of June and use the money from the Tokyo-based auto maker to develop new car electronics products.
With losses mounting, Pioneer has decided to exit the flat-panel television business and concentrate on electronics for the auto industry.
Pioneer is also preparing to apply for a government cash injection under newly approved measures in Japan’s economic stimulus program.
Under a medium-term business plan also announced Tuesday, Pioneer said it will need to raise around 40 billion yen, but details for other financing deals aren’t set yet.
In the latest deal with Honda, the auto maker will pay 170 yen for each of the 14.7 million new Pioneer shares to be issued. Honda will have a 6.54% stake in Pioneer, becoming the second largest shareholder after Sharp Corp.
Sharp’s stake in the electronics maker will decline to 13.35% from 14.28% after the new share issue. Pioneer’s reform plans over the next three fiscal years through March 2012 include closing nine of 30 group companies undertaking production in Japan and overseas and shrinking capacity at six others.
It is also laying off 5,800 full-time employees and 4,000 contract-based workers from this year. At the end of December 2008, Pioneer had 36,925 full-time employees. It will also reduce the total number of directors and executive officers this year to 19 from 25.
Pioneer expects a restructuring charge of 47 billion yen in this fiscal year ending March 2010, but it expects its reform measures to reduce fixed costs by 50 billion yen in this fiscal year and a further 85 billion yen in the following year.
For the fiscal year ended March 31, Pioneer forecast a net loss of 129 billion yen, slightly narrower than a 130 billion yen loss estimated in mid-February. It will report full-year results May 13. The company also projected a net loss of 83 billion yen for this fiscal year. It expects to return to the black in the fiscal year ending March 2011 with a net profit of eight billion yen.