Thu, Sep 13, 2018 - Page 10 News List

Pioneer to get a US$538m bailout


Pioneer Corp, once among the world’s hottest names in technology before succumbing to debt and failed expansions, agreed to a bailout from Baring Private Equity.

Baring Private Equity is to buy as much as ¥60 billion (US$538.32 million) of stock in the Tokyo-based company, according to a filing made yesterday.

However, its shares fell 9.3 percent to their lowest level in nine years after the company said the deal was not legally binding, although executives told reporters that they hope to clinch an agreement by next month.

Pioneer became a household name in the 1980s with its home and car stereo systems, but has struggled for years after failed expansions into new markets left it saddled with debt.

Last month, it expressed uncertainty that it could continue as it heads toward a full-year operating loss.

The company is to get a ¥25 billion bridge loan to tide it over ahead of the share sale, and plans to remain publicly traded.

“Today is the first step toward a Pioneer reborn,” chief executive officer Koichi Moriya told a briefing in Tokyo. “We are working as one to clinch the official contract by the end of October and come up with a restructuring plan. In five to seven years we can be growing again.”

Pioneer helped change karaoke and home entertainment in the 1980s with laser discs, invested heavily in plasma televisions and introduced the world’s first commercial OLED display for a car stereo in 1999, but was unable to build a sustainable market in those sectors and was caught out by changes in technology.

Pioneer now has total debt of ¥50.3 billion, according to data compiled by Bloomberg.

It has focused on car navigation and visualization systems as it seeks to break into the autonomous car market.

“Self-driving needs maps and we want to be the first in the world to come up with a business model based on our map technology,” Moriya said.

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