According to two sources, Japan’s Rakuten Group Inc (4755.T) is finalizing plans to issue new shares to generate $2.2 billion to shore up its finances following years of mobile business losses.
One person said Rakuten’s board could decide on capital raising this week.
The public offering is projected to raise 300 billion yen ($2.2 billion), although Rakuten’s share price will affect the stock issuance’s price.
The insider added that Rakuten would issue shares to founder and CEO Hiroshi Mikitani and his fund.
The sources said it would use the funds to reduce debt and install mobile base stations. In addition, the corporation has been selling assets and listing group units to raise cash.
Rakuten declined to comment. The representative stated the corporation was still analyzing its financial options.
The spokeswoman said it would publicize such a decision. Since the topic is private, the sources declined to be identified.
On Friday, Rakuten suffered another quarterly loss and announced it would sell its stake in grocery chain Seiyu to U.S. private equity firm KKR & Co Inc (KKR.N) for 22 billion yen, three years after buying the shares from Walmart Inc. Its banking unit’s IPO raised 83.3 billion last month. It may also list its brokerage.
Refinitiv data shows Rakuten has lost 735 billion yen in four years, including a record loss last year. After dividends, its shares have lost 24% over the past three years, compared to the TOPIX’s 54% gain. Shares are up 24% this year.
Mikitani planned to develop Japan’s fourth major mobile carrier using cloud-based software and commoditized hardware to create a low-cost countrywide network.
The build-out has been expensive, and Rakuten has struggled to gain market share against bigger rivals with better network service.
Refinitiv data indicated the business has 400 billion yen in bonds due in 2024 and 430 billion in 2025.
Its January U.S. dollar-denominated bonds pay above 10% annually.
In January, S&P Global Ratings called Rakuten’s debt “junk.” This year, they predicted the “prospect of deeply negative free operating cash flow” and “very weak financial standing” in the non-financial unit.
