May 18 (Bloomberg) -- Toshiba Corp., Japan’s biggest maker of semiconductors, began the sale of more than $3 billion of stock after a record loss wiped out more than half of the company’s capital last year.

The company plans to offer 870 million new shares at 3 percent to 5 percent below the stock’s closing price the day the sale ends, which may be as early as next week, according to an e-mail sent to investors today by sale arranger Nomura Holdings Inc. About 690 million shares will be sold to Japanese investors and 180 million to overseas buyers, according to the e-mail.

Toshiba plans to sell about $5 billion of stock and bonds after tumbling chip prices drove the company to a loss of 343.6 billion yen ($3.6 billion) last fiscal year. The share offering, Toshiba’s first since 1981, may help the company replenish its capital and invest in factories to compete against Samsung Electronics Co. in the semiconductor market.

“The pricing range looks fairly bullish given that the stock market isn’t in a rally,” Yuuki Sakurai, general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets.

Toshiba fell 4.5 percent to 363 yen at the close on the Tokyo Stock Exchange, its biggest decline this month. The shares have fallen 0.8 percent this year, compared with a 2 percent increase for Japan’s Nikkei 225 Stock Average.

Expecting Profit

The company expects to return to an operating profit this year as production cuts by chipmakers worldwide prompt a rebound in prices, Tokyo-based Toshiba said May 8 when announcing plans to sell as much as 313.1 billion yen of stock and as much as 180 billion yen of 60-year subordinated debt.

The chipmaker said that day it would sell the new equity at a discount of as much as 10 percent of the closing price on the day the sale is completed, depending on demand.

The company will pay a coupon of 7.5 percent for the first five years for the bonds and then an interest rate of 7.5041 percent plus the 6-month London interbank offered rate for yen, Toshiba said in a statement today. Moody’s Investors Service rated the debt Ba1, one level below investment grade.

Mizuho Financial Group Inc. and Daiwa Securities Group Inc. have also been hired to help arrange the stock sale.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Yoshinori Eki in Tokyo at yeki@bloomberg.net.

Last Updated: May 18, 2009 05:58 EDT