Pioneer Revitalization Plan: Baring Private Equity Asia to invest 77 billion yen in Pioneer

On December 7, Baring Private Equity Asia (BPEA) and Pioneer Corporation in a joint press release announced the Pioneer Revitalization Plan which comprises a 77 billion yen (approx. $900 million) investment from BPEA in Pioneer and a cash offer from BPEA to existing Pioneer shareholders of approximately 25 billion yen.

The Plan aims to bring stability to the business by securing vital working capital and management support from BPEA and removing uncertainty about the Company’s ability to continue sustainable operations.

The Release stated, “To address the urgent need to bring Pioneer back to a sound financial position, given its deteriorating cash flow, BPEA plans to invest 77 billion yen (52 billion yen in cash as a capital injection together with a 25 billion yen debt-for-equity swap) immediately following shareholder approval at an extraordinary shareholders’ meeting and the completion of the required filings. These steps will secure working capital vital for Pioneer’s business operations. BPEA will then make a cash offer of about 25 billion yen to purchase all outstanding shares from the existing Pioneer shareholders and take the Company private.”

The Release further added, “Once privatized, a range of significant changes will be made to revitalize Pioneer, including reviews of the Company’s business lines as well as structural reforms and an overhaul of the management team.”

BPEA and Pioneer are confident that the Pioneer Revitalization Plan offers the best option to take the Company back to a sound operational footing and return to a growth path.

In this regard, Pioneer’s President and CEO Koichi Moriya said, “I believe BPEA shares our vision for a return to growth, making it the best partner to implement the Pioneer Revitalization Plan. Mindful of my responsibilities as Pioneer’s leader, it was only after very careful consideration that I concluded that an alliance with BPEA is imperative to the success of the Pioneer Revitalization Plan. My mission is to help revitalize Pioneer as quickly as possible and return the Company to a position where it can deliver products and services that delight all of our customers”.

Subsequently, BPEA’s CEO and Founding Partner Jean Eric Salata said, “BPEA has spent a lot of time building ties with Pioneer and developing this plan, so we are delighted to be able to partner with Pioneer at a pivotal time in its history. We are a long-term investor, averaging five or more years, and have successfully partnered with a number of Japanese companies, since opening our Tokyo office in 2006. We are confident that the combination of our investment and management support offered under the Pioneer Revitalization Plan will enable Pioneer to fully realize the potential of its innovative technology, well-established brands and employees. Our goal is to ensure that Pioneer continues to offer products that embody the Pioneer brand and are loved by so many people around the world”.

Notably, according to the Release, this transaction is subject to shareholder approval at an extraordinary meeting of Pioneer shareholders scheduled for January 25, 2019 and gaining regulatory approvals, including international and domestic anti-trust clearances. The third-party share allotment is expected to complete on March 1, 2019, at the earliest, with BPEA set to take full ownership of Pioneer in March 2019.