Pricing Hitachi Securities - Fundraising Through the Stock Market
When your company's in debt and you want to raise more funds, what do you do? In the case of Japanese company Hitachi, Ltd.
, the solution is to use the stock market to make up the difference.
At the end of the last fiscal year in March, the company had a loss of 787.
3 billion yen and, since then, the company has been coming up with solutions for making up the difference.
In North America, Hitachi is known primarily as a manufacturer of power tools but, in Asia, the brand is all-inclusive, with trains, plasma screens, and telecommunications as part of their product offerings.
Adding more stocks, moving around workers, and closing some manufacturing plants appear to be Hitachi's solution for recovering from debt.
This past week, the company declared they need more funds after selling 350.
7 billion yen ($3.
9 billion USD) in stock and bonds, which are needed to finance factory closures and expand their trains and medical systems.
But, aside from expanding these two services, Hitachi, in the present time, doesn't plan to expand into any more fields.
As far as their shares are concerned, they have reduced it 200 units to prevent holdings from being diluted and, at the same time, relocated workers to cut 260 billion yen from their debt.
The shares and bonds, however, are priced below target and this is a result from a drop in stock price.
The new shares are being sold at 230 yen each, with a conversion of 317 yen per share.
This is designed to bring in 349.
29 billion yen.
The closing level for these shares is 238 on the Tokyo Stock Exchange, which is 12 percent lower than the last closing level on November 16.
For those with or considering Hitachi shares, the convertible bonds have a 0.
1 percent coupon and begin to mature by December 12, 2013.
But, if the shares end up at 130 percent above the conversion price, Hitachi may redeem them by January 4, 2013.
Between the amount raised from stocks and moving workers, Hitachi plans to allocate 260 billion yen to their industrial, such as power tools, and telecommunications fields and the rest of the amount will go toward their debt.
Hitachi isn't the only company North Americans are familiar with trying this approach, however.
In fact, car company Mitsubishi has been trying this approach at the same time, as well.
, the solution is to use the stock market to make up the difference.
At the end of the last fiscal year in March, the company had a loss of 787.
3 billion yen and, since then, the company has been coming up with solutions for making up the difference.
In North America, Hitachi is known primarily as a manufacturer of power tools but, in Asia, the brand is all-inclusive, with trains, plasma screens, and telecommunications as part of their product offerings.
Adding more stocks, moving around workers, and closing some manufacturing plants appear to be Hitachi's solution for recovering from debt.
This past week, the company declared they need more funds after selling 350.
7 billion yen ($3.
9 billion USD) in stock and bonds, which are needed to finance factory closures and expand their trains and medical systems.
But, aside from expanding these two services, Hitachi, in the present time, doesn't plan to expand into any more fields.
As far as their shares are concerned, they have reduced it 200 units to prevent holdings from being diluted and, at the same time, relocated workers to cut 260 billion yen from their debt.
The shares and bonds, however, are priced below target and this is a result from a drop in stock price.
The new shares are being sold at 230 yen each, with a conversion of 317 yen per share.
This is designed to bring in 349.
29 billion yen.
The closing level for these shares is 238 on the Tokyo Stock Exchange, which is 12 percent lower than the last closing level on November 16.
For those with or considering Hitachi shares, the convertible bonds have a 0.
1 percent coupon and begin to mature by December 12, 2013.
But, if the shares end up at 130 percent above the conversion price, Hitachi may redeem them by January 4, 2013.
Between the amount raised from stocks and moving workers, Hitachi plans to allocate 260 billion yen to their industrial, such as power tools, and telecommunications fields and the rest of the amount will go toward their debt.
Hitachi isn't the only company North Americans are familiar with trying this approach, however.
In fact, car company Mitsubishi has been trying this approach at the same time, as well.
Source...