Japanese Firms Come Together To Help Out Renesas
Following the proposed bail out by KKR, several Japanese firms including NEC, Hitachi and Mitsubishi Electric, have come together to help Renesas out of a big hole
Renesas Electronics Corp. has signed a guarantee deposits agreement with NEC Corporation of loan agreements with Hitachi, Ltd. and Mitsubishi Electric Corporation and a syndicate loan agreement with Renesas' main financing banks.
In total, the organisations will inject 97 billion Yen (US $1.24 billion ) in order to accelerate business reforms to aid Renesas and bring the firm back into profitability.
These agreements now secure the funds for the structural reform of production sites and the early retirement incentive program as announced by Renesas on July 3rd, 2012. This financing will become effective October 1st, 2012.
With these financial arrangements in place, Renesas will accelerate business, financial and product offering reforms to reach the goals of profitability, a reduced fixed-cost base and an ability to respond to market changes flexibly.
Renesas intends to consistently achieve an operating profit ratio of more than 10 percent.
NEC, Hitachi and Mitsubishi Electric have put in 49.5 billion yen (US $0.64 billion) to fund the business reform at Renesas. Funding from NEC is a guarantee deposit for stable product supply.
The syndicate loan of 47.5 billion yen (US $0.62 billion) by the main financing banks are from the Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited and Mitsubishi UFJ Trust and Banking Corporation.
The impact on business performance is currently being reviewed, should any correction to the sales estimate be necessary, Renesas will make a prompt disclosure.
Renesas Electronics Corporation is a supplier of advanced semiconductor solutions including microcontrollers, SoC solutions and a broad-range of analogue and power devices.
Business operations began as Renesas Electronics in April 2010 through the integration of NEC Electronics Corporation and Renesas Technology Corporation.
