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Tokyo - Mazda Motor plans to raise $2.1bn to shore up its
finances and invest in a new plant in Mexico, financial sources said on Tuesday
- a bigger-than-expected fundraising that sent its shares tumbling 10%.
The loss-making automaker aims to raise ¥100bn through a
public share offering and ¥70bn through subordinated loans from banks, two
sources with knowledge of the matter said.
“The company’s fundamental outlook is still very grim and at
the same time there is a huge need for cash,” said Koji Endo, analyst at
Advanced Research Japan.
“Even if they raise ¥170bn, which sounds like a pretty big
number, when they get done paying the bills it could evaporate pretty
quickly,” he said.
Battered by a strong yen, the nation’s No 5 automaker is set
to post its fourth straight annual net loss in the financial year to March.
This month it predicted red ink of ¥100bn, much worse than an earlier estimate
of a ¥19bn loss.
Hiroshima-based Mazda, which makes the Mazda2 subcompact and
the Mazda3 compact car, is the most exposed among Japanese automakers to
currency swings, building about 70% of its vehicles in Japan and exporting
90%of those last year.
To reduce its reliance on exports, Mazda plans to construct a plant in Mexico and renovate its Thai factory.
Other capital expenditure plans include the introduction of
next-generation engine and transmission technology on all its cars by around
2016.
The share offering follows one in 2009, when Mazda raised
¥98bn via a mixture of new shares and treasury stock.
One financial source said the new loans would be provided by
Sumitomo Mitsui Financial Group, the state-backed Development Bank of Japan and
other banks, adding that the announcement could come on Wednesday.
Mazda said in a statement that no official decisions had
been made.
Shares in Mazda ended down 10% at ¥145, after falling as
much as 14% at one stage. It was the most actively traded stock by volume on
the Tokyo bourse’s main board.
“I think share reaction of this size is to be expected for
such a large surprising fund-raising,” said Kenichi Hirano, operating officer
at Tachibana Securities.
In addition to plans to build a car factory in Mexico next
year, it is considering a joint venture with Russian car maker Sollers to
produce Mazda cars in Vladivostok.
Mazda CEO Takashi Yamanouchi said last week the car maker is
in talks over project-based tie-ups but is not seeking a capital alliance.
