Bloomberg News

Renesas Rises on Report of $630 Million Loan: Tokyo Mover

June 14, 2012

Renesas Rises After Report of 50 Billion-Yen Loan

Renesas Electronics Corp.'s 300mm wafer for mobile phones is displayed at the company's Naka plant in Hitachinaka city, Ibaraki prefecture, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Renesas Electronics Corp. (6723) surged in Tokyo trading after the Mainichi newspaper said the world’s biggest maker of microcontrollers for cars is in final talks to borrow 50 billion yen ($630 million) from its major lenders.

The chipmaker rose 15 percent to 316 yen at the close on the Tokyo Stock Exchange, while Japan’s benchmark Nikkei 225 Stock Average fell 0.2 percent.

The company’s three biggest shareholders -- Mitsubishi Electric Corp. (6503), NEC Corp. (6701) and Hitachi Ltd. (6501) -- will guarantee loans from its banks, including Mitsubishi UFJ Financial Group Inc. (8306) and Mizuho Financial Group Inc. (8411), the Mainichi newspaper reported, citing an unidentified person. Kawasaki, Japan-based Renesas will also have a commitment line for more than 50 billion yen in additional loans, the newspaper said.

“The report eases some concerns about the company, as it may get support from its shareholders,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. The rally may be short-lived, he said.

Yoichi Kobayashi, a spokesman for Renesas, declined to comment.

“The current troubles at Renesas aren’t just a problem for us, but for Japan’s automakers as well,” Kunihiko Onuma, head of Hitachi’s automotive systems unit, told analysts and reporters today in Tokyo. “We’ve strongly told Renesas management that they need to act to survive.”

Japanese carmakers will lower their reliance on Renesas chips, he said.

Survival Value

Renesas is worth keeping afloat, Japanese Bankers Association Chairman Yasuhiro Sato said at a regular press conference today. Sato, who is also chief executive officer of Mizuho, declined to comment on bank support for the chipmaker.

“Nothing has been decided,” NEC said in a statement to the stock exchange. Atsushi Konno, a spokesman for Hitachi, also said no decision has been made and declined to comment further. Mitsubishi Electric has no comment, said a spokesman, who declined to be named.

Renesas was formed in 2010 after the merger of money-losing chipmakers Renesas Technology Corp., a venture between Hitachi and Mitsubishi Electric, and NEC Electronics Corp. The new company has lost money every year since.

The chipmaker’s semiconductors are used in products from automobiles to consumer electronics for tasks including triggering air bags in cars and controlling DVD players. The company’s customers include Apple Inc. and Sony Corp., according to data compiled by Bloomberg.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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