January 26, 2006 – Sanyo stock has fallen drastically. Investors are seemingly unhappy about the company’s announcement to sell $2.6 billion of preferred (new) stock at a discount to three major banks as part of its plan to finance a restructuring through increasing its share capital.
Sanyo explains that two groups of No. 1 Class A and No. 1 Class B preferred shares are being divided among Goldman Sachs, Sumitomo Mitsui Financial Group and Daiwa Securities SMBC according to the terms of a bail out agreement. The dole of preferred shares will dilute current shares of Sanyo Electric Co. stock. Class A preferred shares will be convertible into 10 shares of common Sanyo stock as of March 13, 2007. Class B shares will have the same worth, but may not be transferred to a third party without Sanyo’s consent until March 13, 2007.
According to the Bloomberg news wire, Sanyo stock has fallen 16% on this news, the most drastic drop ever seen on the Morgan Stanley Capital International World Index.
Sanyo Electric Co. stock had earlier risen 8% on the news that Satoshi Iue, the son of Sanyo founder Toshio Iue, was stepping down as executive director of Sanyo’s board, and handing control over to Goldman Sachs, Sumitomo Mitsui Financial Group and Daiwa Securities SMBC as part of a bail out deal with the three banks.