Printer Friendly

NEC to issue hybrid security, Euroyen convertible bonds.

TOKYO, Nov. 15 Kyodo

NEC Corp. said Thursday it will raise 200 billion yen in funds by issuing a new type of subordinated security called trust preferred securities worth 100 billion yen and Euroyen-denominated convertible bonds of another 100 billion yen.

This is the first time for a nonfinancial firm to issue trust preferred securities, a hybrid security that has characteristics of both debt securities and equities and is designed to minimize the dilution of shareholder value, NEC said.

Under the new financing scheme, the Japanese high-tech firm will set up a wholly owned business trust in the state of Delaware in the United States.

The trust will then issue trust preferred securities, which are targeted primarily at individual investors in Japan. The proceeds of the securities will be used to buy a subordinated security to be issued by NEC, meaning that the hybrid security will in reality be issued by NEC. The payment date is slated for Dec. 18.

The hybrid security will have a perpetual maturity with a call option exercisable starting five years after the initial issuance, NEC said. Distributions on the security will be deferrable for a certain period if dividends are not paid on NEC's common stock.

NEC also said the repayment priority for holders of the new security in the event of a company liquidation will be placed behind ordinary creditors. Thus, an expected rate of distribution on the new security for the first five years will be set at 2.4%-2.9%, higher than NEC's ordinary corporate bonds.

Moody's Investors Service Inc. said later in the day that it will assign a Baa2 rating to NEC's planned 100 billion yen trust preferred security. At the time of assigning the Baa2 rating, it will also be placed under review for possible downgrade, Moody's added.

Moody's comments that ''the issuance of this security should be viewed within NEC's overall financial strategy,'' the U.S. rating agency said in a statement.

Moody's also said it will assign a Baa1 rating to the 100 billion yen convertible bonds.
COPYRIGHT 2001 Kyodo News International, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Comment:NEC to issue hybrid security, Euroyen convertible bonds.
Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:Nov 19, 2001
Words:342
Previous Article:Dollar little changed in Tokyo morning deals.
Next Article:Nikkei jumps 4% on military victories in Afghanistan.
Topics:


Related Articles
Euroyen rate futures down on Moody's review.
Key money rate flat at 0.02% in Tokyo.
Overnight call rate eases in some deals in Tokyo morning.
Nichiei to issue 24.5 bil. yen in euroyen CBs.
MMFs fall below par value due to inclusion of Enron bonds.
FSA's Mori says banks don't need more public funds.
CORRECTED: Moody's downgrades Japan's domestic gov't bond...
Moody's cuts ratings on 4 Japanese public entities.
Nikko Cordial buys bonds to help Nikko Asset repay investors.
FSA to review investment tools in MMF portfolio.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters