Kenwood takes steps to improve financial results
Kenwood Corp., Tokyo, has negotiated agreements with lenders, investors and labor, and has completed a two-month round of layoffs. Together, the steps were expected to fund future growth, reduce operating expenses and eliminate the $137 million negative net worth that the company reported as of March 2002.
The company reported a loss of $215 million on $2.44 billion in sales for the fiscal year ended March 2002; a loss of $176 million on $2.45 billion in sales for 2001; and a loss of $9.6 million on $2.6 billion in sales for 2000.
Kenwood said that a Sept. 26 collective bargaining agreement with its union workers included a 15% salary cut that became effective this month.
Kenwood said that the employee reduction alone had put the company on course to eliminate its negative net worth by March 2004, but the conversion of debt to equity and the issuance and sale of additional stock to current and new investors would accelerate the improvement in its financial condition.
The company said that Asahi Bank, Kenwood’s principal lender, has agreed to exchange $202 million in debt for preferred stock and to extend a $161 million line of credit.
Kenwood said that its largest shareholder, SPARX Asset Management Investment Trust Co., a Japanese direct investment management company with headquarters in Hamilton, Bermuda, and Merrill Lynch Investment Managers Company, Plainsboro, N.J., have agreed to underwrite a $16.1 million common stock increase for Kenwood. Through an allocation to third parties, the two companies will purchase the stock using several mutual and other investment funds that they own or manage, enabling Kenwood to increase its capital.