Akebono Brake to receive $185 mln for turnaround, shares soar (updated)
18/07/2019 04:26
(Recasts with company announcement)
TOKYO, July 18 (Reuters) - Japan's Akebono Brake Industry Co
Ltd 7238.T said on Thursday it will receive about $185 million
from a corporate turnaround fund to help restructure its
money-losing business, sending its shares sharply higher.
The supplier of brakes to General Motors Co GM.N , which
makes up about a quarter of Akebono's sales, and other
automakers said it would issue new shares worth 20 billion yen
($185 million) to Japan Industrial Solutions.
Shares of Akebono soared as much as 43% to 166 yen on the
Tokyo Stock Exchange.
The company also said in a statement that it would book a
special loss of 7.8 billion yen ($72 million) in the April-June
quarter for quality-related issues.
As part of the turnaround plan, the company said it is
planning to downsize its overseas ambitions and ask lenders to
substantially waive its debt.
Founded in 1929, Akebono manufactures brakes and brake pads
for passenger and commercial vehicles, motorcycles, rolling and
industrial machinery. It operates plants in Japan, North
America, Europe and Asia and generates roughly half of its sales
from North America, its biggest market.
Besides General Motors, it supplies Toyota Motor Corp
7203.T , which owned 11.6 percent of Akebono as of March,
Nissan Motor Co 7201.T and other major automakers.
Akebono's latest financial woes date back to around 2014,
when the company was struggling to fill a surge in orders from
customers in the United States, where vehicle sales were
climbing to record highs. urn:newsml:reuters.com:*:nL3N1ZU04E
The scramble to manufacture more products beyond its
production capabilities resulted in additional manufacturing
costs, including labour and shipping costs, leading to a
three-year run of operating losses in North America.
($1 = 107.7500 yen)
(Reporting by Chris Gallagher and Makiko Yamazaki; Editing by
Richard Pullin and Muralikumar Anantharaman)
((chris.gallagher@thomsonreuters.com; 81-3-6441-1842;))