Mazda seeks ¥233bn injection with loss set to widen

MAZDA was planning to raise as much as ¥232.8 billion (R22.4bn) selling stock and taking out a loan, the car maker said yesterday after forecasting its biggest annual loss in 11 years.

Japan’s least profitable major car manufacturer said it might sell 1.22 billion new shares for as much as ¥162.8bn and borrow ¥70bn from banks. The record sale would increase the number of Mazda’s outstanding shares by almost 70 percent.

The nation’s most exportreliant car maker is bracing for a ¥100bn annual loss after the yen appreciated against all major currencies during 2011, which has also driven down earnings at Toyota and Honda.

The proceeds may help the company avoid a debt-rating downgrade and allow it to fund overseas factories needed to reduce its vulnerability to the Japanese currency.

“The company needs to speed up overseas expansion, partly because its reliance on exports drove the company into its situation,” said Cosmo Securities analyst Mitsuo Shimizu. “It’s going to take some time to evaluate whether the sale was the right decision.”

The sale target equates to a price of ¥133 a share, 10 percent lower than yesterday’s close. Mazda closed 1.4 percent up at ¥147 before the announcement.

The maximum value of the sale, scheduled for pricing as early as March 5, is equivalent to 62 percent of Mazda’s market capitalisation.

Shimizu said the stock might fall to as low as ¥120 because the scale of the stock sale was bigger than expected. The stock was the worst performer last year among major Japanese car makers. – Bloomberg he would not close the door on any eventual alliances.

Fiat held talks with Peugeot after the 2008 financial crisis regarding a possible combination, a person familiar with the matter said. Negotiations failed because the Peugeot family did not want to lose control over the car maker, the person said.

Peugeot, whose car making division missed a target of breaking even last year, earlier said it would sell property as well as a holding in the Gefco trucking unit that had yet to be determined. The disposals included the Citer vehicle-rental unit that Peugeot sold to Enterprise Holdings for 440m.

Earnings before interest, taxes and one-time gains or costs fell to 1.32bn in 2011 from 1.8bn a year earlier, Peugeot said. The company’s deliveries globally fell 1.5 percent to 3.5 million vehicles last year. – Bloomberg