Pioneer Corp., once among the world’s hottest names in technology before succumbing to debt and failed expansions, agreed to a bailout from Baring Private Equity.
Baring Private Equity will buy as much as 60 billion yen ($538 million) of stock in the Tokyo-based company, according to a filing on Wednesday. But its shares fell 9.3 percent to their lowest in nine years after the company said the deal wasn’t legally binding, though executives told reporters they hoped to clinch an agreement by October.
Pioneer became a household name in the 1980s with its home and car stereo systems but has struggled for years after failed expansions into new markets left it saddled with debt. Last month, it expressed uncertainty it could continue as a going concern as it heads toward a full-year operating loss. The Japanese company will get a 25 billion yen bridge loan to tide it over ahead of the share sale, and plans to remain publicly traded.
“Today is the first step toward a Pioneer reborn,” Chief Executive Officer Koichi Moriya said at a briefing in Tokyo. “We are working as one to clinch the official contract by the end of October and come up with a restructuring plan. In five to seven years we can be growing again.”
Pioneer helped change karaoke and home entertainment in the 1980s with laser discs, invested heavily in plasma televisions and introduced the world’s first commercial OLED display for a car stereo in 1999. But it was unable to build a sustainable market in those sectors and was caught out by changes in technology. Pioneer now has total debt of 50.3 billion yen, according to data compiled by Bloomberg.
More recently, it has focused on car navigation and visualization systems as it seeks to break into the autonomous car market.
“Self-driving needs maps and we want to be the first in the world to come up with a business model based on our map technology,” Moriya said.