Orix to Raise US$1bn in Stock Raising to Repay Debt

Orix Corp, Japan's biggest leasing firm and a major property investor, said today it plans to raise about $1bn in a public share offering to fund investments and repay debt.

Orix said it will sell 18 million new shares to Japanese and overseas investors later this month, and invest some of the proceeds into real estate, to bolster its financial solutions business and to help it expand in Asia.

The share issue, which was first reported by Reuters yesterday, will increase its total number of shares by about 20%.

Orix becomes the latest Japanese company to tap the equity market for funds, encouraged by a near 40% rally in the Japanese stock market over the past four months amid investor hopes the economy has bottomed out.

Orix has been shrinking its asset base and slashing debt as fallout from the global credit crisis sliced into its profits and hit its balance sheet. But it has also been looking to take advantage of the crisis to buy assets cheaply.

The share offering will follow a ¥150bn convertible bond sale announced in November last year.

A capital raising of ¥100bn would improve Orix's debt-to-equity ratio to about 4,1 from 4,5, Nomura Securities estimates, helping allay concerns among some investors that it has relied too heavily on debt to finance its operations.

Orix was sitting on a total of ¥7,2 trillion debt as of March.

The announcement was made after the close of trade. Shares in Orix, which fell to a low around ¥1 700 in late February, closed at ¥5 490.

http://www.bdlive.co.za/world/asia/2013/02/20/orix-to-raise-1bn-for-investments-and-repay-debt#comments