Corporate Finance

Sony To Raise $3.6 billion in Equity and Debt

The funds are part of a plan to achieve a return-on-equity ratio of 10% by 2018.
Katie Kuehner-HebertJune 30, 2015

Sony plans to raise about 440 billion yen ($3.6 billion) in a sale of shares and convertible bonds in Japan and overseas, the company said Tuesday. Stock will make up 321.5 billion yen of the transaction while convertible bonds account for 120 billion yen.

Sony will use the funds to develop and produce stacked CMOS image sensors in its smartphones to “further enhance profitability,” the company said. In addition, Sony plans will use the proceeds raised by the convertible bonds to fund capital expenditures for its mobile device business line.

The sales are part of Sony’s “Mid-Term Corporate Strategy,” through which it aims to achieve a return-on-equity ratio of 10% or more in the fiscal year ending March 31, 2018, the final year of the strategic plan.

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According to Bloomberg, Sony chief executive Kazuo Hirai is focusing on image sensors, games and entertainment to revive growth at Sony, which is projecting its first annual profit in three years. The company has said it’s quadrupling investment in semiconductors to 290 billion yen this year to tap surging demand for the sensors used in Apple and Samsung smartphones.

“The amount they are raising doesn’t correspond to the kind of growth we see in image sensors,” SBI Asset Management chief investment officer Yasuaki Kogure told Bloomberg. “This is pretty negative, and” Tuesday’s “share selloff shows a mismatch with market expectations.”

Sony’s shares dropped 8.3%, the most since Sept. 18, to 3,461.5 yen on Tuesday.

However, Sony expects sales in the image censor business to climb as much as 62% to 1.5 trillion yen in the next three years, Bloomberg said.

Sony’s net cash, or cash minus debt, stood at 1.4 trillion yen as of March 31, compared with 826 billion yen in the previous quarter and 500 billion yen a year earlier, according to Bloomberg.