NEC Announces Fund Procurement through Hybrid Financing
OREANDA-NEWS. NEC Corporation announced the conclusion of the execution of financial arrangements by hybrid financing (subordinated loan).
NEC recently established its "Mid-term Management Plan 2015," which emphasizes the importance of "Solutions for society," "A focus on Asia and the promotion of locally-led business," as well as "Stabilizing the financial foundation" as part of realizing a fulfilled society that is safe, secure, efficient and fair.
In order to realize this plan, NEC concluded that a subordinated loan is the most efficient means for improving and stabilizing the balance sheet, as well as increasing the flexibility and speed of strategic investment. This financing will help to reinforce the financial base and to make investments in solutions for society, including Software-Defined Networking (SDN), Smart Energy and Safety.
The funds procured from these subordinated loans are planned to help repay existing interest-bearing liabilities and to finance business that is necessary for implementing the Mid-term Management Plan 2015.
This subordinated loan is hybrid financing with features that are midway between equity and debt. Although it is debt, it has aspects and characteristics of equity such as optional deferral of interest payments, an especially long repayment period, subordination with respect to liquidation and bankruptcy proceedings and the like. It is expected that Rating and Investment Information, Inc. (the "Ratings Institution") will recognize 50% of the total value of the financing as equity credit attributes for the purpose of rating.
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