Japanese brake pad maker Akebono announced on July 18 that it will receive approximately $ 185 million in corporate restructuring funds to help the company restructure its loss-making business. Affected by this news, the company's stock price rose sharply.
Japanese brake pad manufacturer Akebolo announced on July 18 that it will receive approximately $ 185 million in corporate restructuring funds to help the company restructure its loss-making business. Affected by this news, the company's stock price rose sharply.
Akebono is a supplier of brake pads for General Motors, and GM's orders account for about a quarter of the company's sales. Akebono said they will issue 20 billion yen (about $ 185 million) of new shares to Japan Industrial Solutions. After the announcement, the company's stock price soared 43% to 166 yen per share on the Tokyo Stock Exchange, and rose 8% on the day.
The company also stated in a statement that due to product quality-related issues, the company will account for a specific loss of 7.8 billion yen (about $ 72 million) in its April-June quarterly financial report. As part of the restructuring plan, the company said it would scale back its overseas operations and asked creditors to forgive its debt significantly.
According to local Japanese media reports, Akebono plans to meet with creditors next Monday, when the company will seek debt relief totalling about 50 billion yen (about 463 million US dollars). As of March this year, Akebono had a total of more than 100 billion yen (about 928 million US dollars) of interest-bearing debt. An Akebono spokesman said the company has not yet made any relevant decisions.
Akebono was founded in 1929 to produce brakes and pads for passenger cars, commercial vehicles, motorcycles, steel rolling and industrial machinery. The company has plants in Japan, North America, Europe, and Asia, with North America being its largest market, which accounts for about half of the company's total revenue. In addition to GM, Akebeno also supplies to Toyota, Nissan and other large car companies. As of March this year, Toyota owns 11.6% of the company.
The company's recent financial crisis began around 2014, when orders from US customers suddenly surged and it was difficult for the company to meet the needs of those customers. At that time, car sales in the United States were climbing to record highs. As the order volume exceeded Akebeno's capacity, efforts to produce more products brought additional manufacturing costs to the company, including labor costs and transportation costs, causing the company's North American market operations to experience operating losses for three consecutive years.