Sony Corp. (6758), whose credit was downgraded to junk by Fitch Ratings last month, plans to boost its capital ratio to at least 40 percent by reviving its business and converting bonds to equity.
The ratio for the electronics maker, excluding its financial-services unit, may rise to 40 percent or higher in the year ending March 2015 from 27.1 percent as of Sept. 30, said George Boyd, a spokesman for Tokyo-based Sony. Boyd confirmed comments by Chief Financial Officer Masaru Kato reported in the Nikkei newspaper earlier today.
Japan’s biggest TV maker is cutting jobs and selling assets as Chief Executive Officer Kazuo Hirai tries to end a streak of four straight full-year losses amid a strong yen, falling demand and competition from Samsung Electronics Co. (005930) Sony raised 150 billion yen ($1.8 billion) selling convertible bonds last month in its first offering of similar securities since 2003.
Sony fell 0.8 percent to 787 yen as of 10:59 a.m. in Tokyo trading, extending its decline to 43 percent this year.
The company will consider all possible measures, including selling assets, to secure a profit for the fiscal year ending March 31, Boyd said, confirming comments by Kato in the Nikkei report. Sony, which posted a net loss of 15.5 billion yen for the quarter ended Sept. 30, has forecast full-year net income of 20 billion yen.
Fitch cut Sony’s long-term rating by three levels to BB-, three steps below investment grade, on Nov. 22, citing the TV maker’s loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong Japanese currency.
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