|Renesas shareholders agree to $633 million support|
|Wednesday, 20 June 2012 11:18|
Major shareholders of loss-making Renesas Electronics Corp agreed in principle to provide 50 billion yen ($633 million) in a support package that includes loans, sources close to the matter said on Wednesday.
Renesas, the world's fifth-largest microchip manufacturer and a product of successive mergers with Hitachi Ltd, Mitsubishi Electric and NEC Corp, has been struggling in the face of increased overseas competition as it tries to revive its system chip business.
Hitachi, Mitsubishi Electric and NEC confirmed in a statement that they had agreed to provide some kind of support, but that the details are "under consideration".
However, sources said that Hitachi and Mitsubishi Electric, which own a combined 55 percent stake in the chipmaker, would provide loans to the company and that NEC was still considering support that is comparable in scope. The shareholders hope to finalize details of the package by the end of next week, the sources added.
In addition to shareholder support, Renesas will be able to tap a 50 billion yen credit line from its four main banks.
Renesas, a leading supplier of microcontroller chips used in cars, is seeking 100 billion yen in financial support to cut at least 12,000 jobs from its payroll, sources said last month.
It also plans to cut the number of domestic plants by half to around 9 or 10, sources said, as it grapples with mounting costs to upgrade old infrastructure to compete with nimbler rivals, such as Samsung Electronics.
A separate source told Reuters this week that NEC was unable to provide Renesas with loans or fresh capital because it was struggling with its own turnaround plan.
NEC, which posted a net loss of 110.3 billion yen for the year to March 31, had told the other stakeholders it could help Renesas by putting a moratorium on payments and other measures, the source said.
Renesas said last month that it would present a turnaround plan by July, having posted a massive net loss for the year to March 31, caused by last year's natural disasters in Japan and Thailand. ($1 = 79.0300 Japanese yen)