Pioneer & Baring Private Equity Asia Agree on Partnership

Transcription

1 Pioneer & Baring Private Equity Asia Agree on Partnership Pioneer Revitalization Plan December 7, 2018 Pioneer Corporation President & CEO: Mr. Koichi Moriya Baring Private Equity Asia CEO & Founding Partner: Mr. Jean Eric Salata

2 Today s Agenda 1. Overview of Pioneer Revitalization Plan 2. Background & Purpose of Pioneer Revitalization Plan 3. Pioneer Current Status & Revitalization Initiatives 4. The Path to Pioneer s Revitalization 5. BPEA Overview & Reasons for Investing in Pioneer 2

3 Overview of Pioneer Revitalization Plan Pioneer Corporation (Pioneer), the global car electronics company, and Baring Private Equity Asia (BPEA), a global private equity firm which is one of the largest alternative investors in Asia, today unveiled the Pioneer Revitalization Plan. TRANSACTION SUMMARY UPON COMPLETION OF TRANSACTION 1. BPEA invests 77.0 billion yen in Pioneer 2. BPEA acquires all existing Pioneer shares for approx billion yen Pioneer to secure vital working capital as well as management support to continue sustainable operation and return to growth 3

4 Background & Purpose of Pioneer Revitalization Plan Given the deterioration in cash flows, there is an urgent need for Pioneer to return to a sound financial footing. BPEA and the Pioneer management team believe that Pioneer Revitalization Plan offers the most viable option for the Company to continue operating. Units: 100 million yen FY2018 (ended March 31, 2018) FY2019 (ending March 31, 2019) (1) FY2020 (ending March 31, 2020) (1)(2) FULL YEAR ACTUALS FIRST HALF ACTUALS SECOND HALF ESTIMATE FULL YEAR ESTIMATE FIRST HALF ESTIMATE SECOND HALF ESTIMATE FULL YEAR ESTIMATE Cash flows from operating activities Cash flows from investing activities (27) (332) (157) (90) (247) (159) (104) (263) Free Cash Flows (172) (116) (43) (159) (186) 50 (136) Cash flows from financing activities (65) (26) (87) (7) (94) (1) This forecast is the planned cash flows based on the current business environment and is subject to change based on reviews of the management structure going forward. (2) This third-party allotment to BPEA is not included in this forecast. 4

5 Pioneer Current Status & Revitalization Initiatives FUNDAMENTAL ISSUES Imbalances in the following: COST MANAGEMENT TECHNOLOGY MANAGEMENT CASH MANAGEMENT Substantial uncertainties about Pioneer s assumption as a going concern FUNDAMENTAL MEASURES Alliance with BPEA is essential to revitalize Pioneer Stabilize financial base and implement the following: Review supply chain Review business portfolio Undertake structural business reform Reform management structure (Enhance Governance) 5

6 Pioneer Current Status & Revitalization Initiatives Review Supply Chain Review planning, development, production and sales operations Create robust yet flexible manufacturing system Review Business Portfolio Expand manufacturing-based solutions business Strengthen business alliances and prioritize and focus its businesses Structural Reform Reform Management Structure (Enhance governance) Streamline business structure Streamline workforce (Approx. 15% reduction) Changes to Board membership Overhaul decision-making process Implement Further Cuts in Directors & Executive Officers Remuneration (from Jan. 1, 2019) President & CEO Moriya: Basic remuneration cut 100% Other Members: Basic remuneration cut 40-70% 6

7 Transaction Timeline 12/7/2018 Pioneer s Board of Directors Meeting / Announcement / Record Date for Extraordinary Shareholders Meeting 1/25/2019 (planned) Pioneer s Extraordinary Shareholders Meeting March 2019 * (planned) March 2019 (planned) May~ 2019 * (planned) New shares issued to BPEA through Third Party Allotment Pioneer stock delisted Acquisition of all outstanding shares from existing shareholders *Third-party allotment and acquisition of all outstanding shares from existing shareholders are subject to approval at the shareholders meeting and regulatory approvals including anti-trust. Moreover, the timing of the payment processing to current shareholders is scheduled to begin two months after effective date of the reverse stock consolidation. (March 31, 2019 provided the new share allotment is completed on March 1, 2019). However, pending the court approval day and the related procedures there is a possibility that completion may be delayed beyond the scheduled day. 7

8 The Path to Pioneer s Revitalization Despite the challenging financial situation Pioneer currently faces, Pioneer believes this partnership with BPEA and the infusion of capital it brings offers a viable future for Pioneer Pioneer reviewed proposals from potential sponsors and concluded that BPEA was the best partner to successfully implement the Pioneer Revitalization Plan We would like to express our deepest gratitude for all shareholders kind support, and their understanding for Pioneer Revitalization Plan would be highly appreciated 8

9 BPEA Introduction Global Investment Fund Focused on Investing in the Asia-Pacific Region Investors by Geography $16.0 bn Capital Assets 88 PE investments BPEA Office Location Country/Region where BPEA Office is located 161 Total Team Members BPEA advises funds with committed capital in excess of US$16 billion 70% of BPEA investors are public or corporate pensions or sovereign wealth funds Note: Total capital commitments including funds and co-investments. Team information as of June

10 BPEA Overview BPEA s Origins Trace Back to Baring Bank Which Supported Japan in the Early 20th Century BPEA Has Been Actively Pursuing Investments in Japan banks, including Baring Bank, launch 50 million yen loan to finance railway construction 1 st yen denominated bond issued in London 1924 Baring Bank provided 25 million GBP (3.6 billion yen) loan to help with reconstruction post-tokyo earthquake recovery 2000 BPEA separates from ING Group to become an independently owned firm focused on private equity investments (ING acquired Baring Bank back in 1995) 2006 BPEA opens Tokyo office and completes first investment in Japan Today 7 private equity investments in Japanese corporates completed with a total enterprise value of 275 billion yen (US$ 2.5 billion) Investments span across multiple sectors including industrial, consumer, healthcare and business services 10

11 Why BPEA is Investing in Pioneer BPEA believes Pioneer has three outstanding strengths: innovative technology, strong brands and people Currently, Pioneer is unable to utilize its full potential of these strengths, not only because of financial reasons but structural reasons as well Execution of business transformation through BPEA s capital injection and management support will enable Pioneer to fully realize these strengths and Pioneer will be revitalized In order to execute a transformation of Pioneer, the company must be free of short-term financial constraints and be empowered to take swift and decisive action in a changing market environment. The proposed transaction structure of capital injection and making Pioneer a wholly owned private company is essential to achieving such change 11

12 Disclaimer This joint presentation material is provided for information purposes only. This joint presentation material should be read in conjunction with the full text of the Pioneer s press release disclosed in TDnet (timely Disclosure net) today pursuant to the rules of the Tokyo Stock Exchange, which is available on It is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to this transaction or otherwise nor will there be any sale, issuance, exchange or transfer of securities of Pioneer pursuant to the acquisition or otherwise in any jurisdiction in contravention of applicable law. 12