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Pioneer to receive up to 60 bil. yen bailout from HK fund

TOKYO (Kyodo) -- Pioneer Corp. said Wednesday it will receive up to 60 billion yen ($538 million) from Hong Kong-based investment fund Baring Private Equity Asia to turn around its mainstay car navigation business.

Pioneer will issue new shares to Baring Private Equity Asia by the end of the year after a formal signing of the agreement at the end of October. The plan is subject to approval at an extraordinary shareholders meeting.

The fund will become the biggest shareholder of Pioneer after the new share issues, though how much stake the fund will take will be determined later. Mitsubishi Electric Corp. was the largest shareholder with a 7.4 percent stake in the company and NTT Docomo Inc. the second biggest shareholder with a 6.8 percent stake as of the end of March.

Pioneer said in a press release that its shares will remain listed "for the time being" even after the new share allocation is implemented. The company said it and its group companies will continue using their current trade names and brands "unless the circumstances change otherwise."

With Pioneer facing a deadline at the end of this month to pay back debts of 13.3 billion yen, it will receive 25 billion yen from the fund next Tuesday before the formal investment agreement.

Pioneer, founded in 1938 by precursor Fukuin Shokai Denki Seisakusho, posted group net losses in the past two years through March 2018, due to the struggling performance of its in-vehicle navigation systems, which account for some 80 percent of the company's overall sales. The sector has faced intense competition from smartphones that can also be used to guide drivers.

The Tokyo-based company has been focusing also on the autonomous driving business with enhanced development of advanced sensors and geographic software. But it will likely take a while for the business to become a major profit-generating source.

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