Mazda’s $2 Billion Stock Sale May Help Fund Future Overseas Plants

Japanese automaker Mazda plans to sell over 1.1 billion new shares in a public offering, which should bring 162.8 billion yen (about $2 billion) for the company. The stock offering will help Mazda reduce its dependence on Japanese-built vehicles, which makes the company vulnerable to the fluctuating value of the Japanese yen.

Mazda currently exports about 70 percent of all its vehicles in Japan, meaning profits on vehicles sold overseas vary as the exchange rate shifts. Mazda reportedly expects to report losses of 100 billion yen for the current financial year. Without investment from Ford Motor Company -- Ford previously held a 33.4 percent stake in Mazda but now holds just 3.5 percent -- the Japanese company needs an infusion of cash to further its product plans. In addition to the stock offering, Mazda reportedly plans to borrow 70 billion yen (around $872 million) from domestic banks.

Money from the new shares and bank loans will be used primarily to help Mazda develop its fuel-efficient Skyactiv drivetrain and chassis technologies. The company also will fund construction of new assembly plants in Mexico by late 2013, expansion of manufacturing capacity in China and Russia, and increased production capacity in various countries in southeast Asia. Mazda plans to build 50 percent of its vehicles outside Japan by 2016, and says that it will "actively pursue a strategy of global alliances" over the coming years.

The plant in Mexico will likely build vehicles for North, South, and Central America -- including the U.S. market. However, as was previously announced, Mazda will cease production of the 6 sedan in Michigan and instead build the car only in Japan.

Sources: Mazda, Automotive News

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