Bloomberg News

Renesas May Sell 50 Billion Yen of Shares to KKR, Nikkei Says

June 22, 2012

Renesas Electronics Corp. (6723), the Japanese chipmaker seeking financial aid after five straight quarterly losses, may sell 50 billion yen ($622 million) of new shares to KKR & Co., the Nikkei newspaper said.

The U.S. private equity fund favors spinning off the system-chip business at the Kawasaki-based company, the Nikkei reported today, without saying where it got the information.

KKR declined to comment on the Nikkei report, it said in an e-mailed response to a query from Bloomberg News. Yoichi Kobayashi, a spokesman for Renesas, didn’t immediately return a phone call outside regular business hours.

Renesas is said to have asked for 100 billion yen in assistance after it posted losses amid a slowdown in demand for system chips used inside TVs and computers. Banks including Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Trust Holdings Inc. have agreed to continue offering almost 50 billion yen in lines of credit to Renesas, two people with knowledge of the matter have said.

NEC Corp. and Hitachi Ltd. said June 20 they plan to support Renesas, although details haven’t been decided. The two companies and Mitsubishi Electric Corp. own a combined 91 percent of Renesas, the world’s largest maker of microcontrollers for cars.

Mitsubishi Electric President Kenichiro Yamanishi said May 21 his company may consider “taking some kind of action” to help Renesas.

KKR, Silver Lake

KKR and Silver Lake, another U.S. private equity fund, are in talks to invest “several tens of billions of yen” in Renesas, the Yomiuri newspaper reported June 21, without saying where it got the information. Renesas plans to cut about 14,000 jobs as it seeks to close or sell 11 of 19 domestic plants, the report said.

Hitachi and Mitsubishi Electric will provide a combined 34 billion yen in loans, the Asahi newspaper said June 19. NEC, Japan’s biggest maker of telecommunications equipment, proposed extending payment deadlines for loans, the report said.

Renesas posted a net loss of 62.6 billion yen in the year ended March 31 as orders for system chips fell. The strengthened yen also eroded earnings from overseas, while last year’s record earthquake in Japan and subsequent flooding in Thailand disrupted production.

The company’s customers include consumer-electronics makers Sony Corp., Panasonic Corp. and Sharp Corp., which posted a combined 1.6 trillion yen in losses last fiscal year amid declining demand for televisions and competition from South Korea’s Samsung Electronics Co. and LG Electronics Inc.

To contact the reporters on this story: Greg Chang in San Francisco at gchang1@bloomberg.net; Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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