Basket Case For Decades, Investors Move To Rescue Pioneer
It’s been a basket case Company in Australia for decades, now a major equity fund has moved to bail out struggling AV Company Pioneer.
Baring Private Equity will buy as much as US$538 million of stock in the Tokyo-based company but as soon as the deal was announced Pioneer shares fell 9.3 percent to their lowest in nine years after the company said the deal wasn’t legally binding.
Pioneer became a household name in the 1980s in Australia, with its home and car stereo systems. it’s “Put Pioneer in Your Car and Run Your Car on Music” was a major success accelerating the Company to #1 in the fast growing car sound market. But due to poor management and a lack of investment in marketing the Japanese Company failed to capitalise on their success.
Pioneer helped change karaoke and home entertainment in the 1980s with laser discs, invested heavily in plasma televisions and introduced the world’s first commercial OLED display for a car stereo in 1999.
But it was unable to build a sustainable market in those sectors and was caught out by changes in technology. Pioneer now has total debt of 50.3 billion yen, according to data compiled by Bloomberg.
they had the world’s best Plasma TV due in part to their development of the Pioneer Kuro engine, but this did not help with the technology sold to arch rival Panasonic and their plasma TV business closed down.
Recently there was the Gibson Brands saga with the Company left being owed millions from the collapse of a US Company they sold the rights to manufacture Pioneer branded AV gear.
One the world’s hottest names in technology before succumbing to debt and failed expansions the Company is today looking to capitalise on the development of self-driving vehicles. More recently, it has focused on car navigation and visualisation systems as it seeks to break into the autonomous car market.
“Self-driving needs maps and we want to be the first in the world to come up with a business model based on our map technology,” Moriya said.
Last month Pioneer expressed uncertainty it could continue as a going concern as it heads toward a full-year operating loss.
The Japanese company will get a 25 billion yen bridge loan to tide it over ahead of the share sale and plans to remain publicly traded.
“Today is the first step toward a Pioneer reborn,” Chief Executive Officer Koichi Moriya said at a briefing in Tokyo. “We are working as one to clinch the official contract by the end of October and come up with a restructuring plan. In five to seven years we can be growing again.”