Feb. 5 (Bloomberg) -- Kobe Steel Ltd., Japan’s third-biggest mill, tumbled in Tokyo trading after saying it plans to raise as much as 100.6 billion yen ($990 million) in Japan’s second-biggest share sale this year.
The Kobe, Japan-based steelmaker slid 6.4 percent to the lowest since July 29 at 146 yen in Tokyo trading, making it the worst performer on the Nikkei 225 Stock Average. The shares have declined for five consecutive trading days, the longest falling streak since June.
The company, which has pledged to cut labor expenses and procurement costs in a bid to return to profitability after two consecutive annual losses, said it needs the money to help streamline its steelmaking operations. It will also fund expansion in growth areas, including high-performance steel for automakers designing lightweight and fuel-efficient cars.
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.
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.
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