Japan's Mazda Motor plans to raise $2.1 billion to shore up its finances and invest in a new plant in Mexico, financial sources said on Tuesday — a bigger-than-expected fund raising that sent its shares tumbling 13 percent.
The loss-making automaker aims to raise 100 billion yen ($1.3 billion) through a public share offering and 70 billion yen through subordinated loans from banks, two sources with knowledge of the matter said.
Those loans would be provided by Sumitomo Mitsui, the state-backed Development Bank of Japan and other banks, local media reported earlier.
Mazda said in a statement that no official decisions had been made.
Battered by a strong yen, the nation's No.5 automaker is set to post its fourth straight annual net loss in the financial year to March. This month it predicted red ink of 100 billion yen, much worse than an earlier estimate of a 19 billion yen loss.
Mazda, which makes the Mazda2 subcompact and the Mazda3 compact car, is the most exposed among Japanese automakers to currency swings, building about 70 percent of its vehicles in Japan and exporting 90 percent of those last year.
Shares in Mazda fell 13 percent to 140 yen, and it was the most actively traded stock by volume.
"It was sudden and I think share reaction of this size is to be expected for such a large surprising fund-raising," said Kenichi Hirano, operating officer at Tachibana Securities.
The Hiroshima-based automaker has announced several plans to strengthen its overseas production bases and reduce its reliance on exports.
In addition to plans to build a car factory in Mexico next year, it is considering a joint venture with Russian car maker Sollers to produce Mazda cars in Vladivostok.
Mazda CEO Takashi Yamanouchi said last week the car maker is in talks over project-based tie-ups but is not seeking a capital alliance.