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JAPAN : Mazda to raise $3.6 billion as it eyes emerging markets
Publish Date : 23-Feb-2012
Japan\'s Mazda Motor said on Wednesday it planned to raise US$2.9 billion (S$3.6 billion) to boost its presence in emerging economies as it takes a double hit from the strong yen and falling demand in key developed markets.
The announcement came weeks after the company, Japan\'s fifth largest car maker, said it expected to lose 100 billion yen (S$1.6 billion) in the year to March, a fourth straight annual loss.
Japanese automakers have come under pressure from the strong yen, which last year hit record highs against the dollar, making exports relatively more expensive overseas and cutting the value of repatriated earnings.
Mazda said it would raise up to 162.8 billion yen by issuing new shares while also taking out subordinated loans of 70 billion yen from various banks.
The loans have higher interest rates but are payable only after satisfying other debts.
The firm said it would use the new cash to build factories in Mexico, Russia and in South-east Asia.
It will also strengthen its safety and environmental technology, while improving its corporate structure.
\'The company seeks to strengthen its financial position to secure the funds for growth,\' a company statement said in part.
It will \'push through fundamental structural reforms so that the company may realise a future of steady growth and profitability even in an environment with a strong yen\', it said.
Earlier this month Mazda reported a third-quarter loss of 72.97 billion yen and said it was on course for an annual loss of 100 billion yen because of the currency\'s rise and low demand in debt-afflicted Europe.
It was also hurt by factories being shuttered at home following the March 11 earthquake-tsunami while severe flooding in Thailand hammered production.
At the Tokyo Stock Exchange, Mazda tumbled more than 14 per cent on Tuesday after media reports of the plan.
But its shares rebounded 1.38 per cent to 147 yen on Wednesday, before it confirmed the plan.
