NYK to Raise New Equity Capital

NYK said Thursday it would raise up to $1.58 billion through a public equity offering to strengthen its balance sheet as it hastens reforms to cope with a global shipping slump.

Japan’s largest shipping line said it would use the funds to invest in new ships and fund structural reforms, including cutting the size of its container fleet and a strategy change on its air cargo business.

Nippon Yusen recently said it would halve its container fleet to 60 ships by the end of March 2016. It is also in talks with Japan Airlines to consolidate their air cargo business.

The company also plans to increase the number of bulk carriers to transport iron ore, a booming business that has hugely benefited rival MOL in the wake of strong demand from China.

The severe economic downturn that has reduced global trade volumes pushed all of Japan's top three shipping companies into first-half losses, forcing them to scale back their fleets and review their growth strategies.

NYK in particular has been hit hard by bulging losses in the air cargo business. Its debt ballooned to more than double its equity by the end of September, sharply above such ratios for domestic rivals MOL and “K” Line.

Nippon Yusen said it would raise the new capital through the sale of 220 million new shares in the domestic market and 207 million in overseas markets, with Nomura Securities, Mitsubishi UFJ and Merrill Lynch servicing as co-underwriters.

It plans to issue an additional 33 million shares in third-party allotments to Nomura Securities, boosting its shares outstanding by 37 percent.

The sale will boost the number of outstanding shares by about 35 percent, according to Bloomberg.

The payment date is set between December 8 and 10.

Contact Peter T. Leach at pleach@joc.com.