The Kobe, Japan-based steelmaker slid as much as 7.1 percent to 145 yen as of 9:50 a.m. in Tokyo trading, headed for the lowest since July 29. The shares have declined for five consecutive trading days, the longest falling streak since June.
The fundraising will increase Kobe’s shares outstanding by 17 percent to 3.64 billion, diluting the value of each stock. The price will be fixed between Feb. 19 and Feb. 25, Kobe Steel said yesterday in a statement.
The company, which has two consecutive annual losses, will allocate some of the funds to streamline its steelmaking operations.
About 86 billion yen will be used on capital expenditures to boost iron and steel operations profitability and to reform its alloy business by March 2017, the statement said. About 13.2 billion yen will be used to boost automotive sales of its steel, aluminum and copper products, while the remainder will be used to pay down debt, the statement said.
Kobe Steel yesterday raised its full-year operating profit forecast by 11 percent to 105 billion yen, citing a higher-than-expected increase in product prices. Kobe Steel joined Nippon Steel & Sumitomo Metal Corp. and JFE Holdings Inc. in reporting higher earnings in the third quarter as the weakening of the yen and construction spending in Japan revived the competitiveness of domestic steel suppliers.
President Hiroya Kawasaki has pushed to scale back labor expenses and procurement costs to meet his pledge to return to profit in the current business year.
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