According to Reuters, Japan-based Pioneer Corp. has secured new funding of up to ¥60 billion (US$540 million), from Baring Private Equity Asia.
The deal announced today will have Pioneer issue ¥50 to ¥60 billion worth of shares to Baring by the end of this year, and obtain a ¥25 billion bridge loan from Baring next week. This should allow Pioneer to pay down a bank loan due later this month.
Reuters notes that Pioneer had been struggling with debt, after its venture in car navigation and audio systems failed to live up to expectations. The news agency adds that Pioneer share price dropped by 9.3% yesterday. Pioneer posted a ¥7.1 billion net loss in the fiscal year ended in March, a worsening of the previous year's ¥5 billion loss.
Reuters cites predictions that Pioneer will have a tough time gaining ground in the automotive market, despite the new infusion of funds. Pioneer is going up against larger, well-entrenched competitors such as Panasonic, Bosch and Samsung.
The Baring deal, says Reuters, will probably make Baring the largest shareholder in Pioneer, joining Mitsubishi Electric Corp. and NTT Docomo Inc.