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Japan's Pioneer gets $540 mln lifeline from Baring as debt deadline looms

Wednesday, September 12, 2018

(Reuters by Naomi Tajitsu and Makiko Yamazaki) - Japan’s Pioneer Corp secured a bailout worth up to 60 billion yen ($540 million) from Baring Private Equity Asia, after failed bets on car navigation and audio systems saddled it with debt and pushed it into the red.

Under the terms of the deal, the once-popular stereo maker said it will issue around 50 billion to 60 billion yen worth of shares to Baring by end-December and obtain a 25 billion yen bridge loan from the Hong Kong-based investment firm next week, allowing Pioneer to pay down a bank loan due later this month.

Its shares, however, tumbled 9.3 percent on Wednesday on worries of earnings dilution and as doubts remained about whether the fund infusion and Baring’s backing would be enough to pull the company out of the doldrums.

“Pioneer’s fate depends on whether it can expand in next-generation car navigation systems for self-driving cars, and the Hong Kong fund is apparently seeing the potential there,” said Masayuki Otani, chief market analyst at Securities Japan.

But Otani said Pioneer “will face a very tough race with major automotive component suppliers” and that it is at a disadvantage “because it doesn’t have any major automakers as large shareholders”.



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