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  3. NEC Announces Fund Procurement through Hybrid Financing (Subordinated Loans)

NEC Announces Fund Procurement through Hybrid Financing (Subordinated Loan)

*** For immediate use April 26, 2013

Tokyo, April 26, 2013 - NEC Corporation (NEC; TSE; 6701) today announced the conclusion of the execution of financial arrangements by hybrid financing (subordinated loan).

1. Financing Purposes

NEC recently established its "Mid-term Management Plan 2015," which emphasizes the importance of "Solutions for society," "A focus on Asia and the promotion of locally-led business," as well as "Stabilizing the financial foundation" as part of realizing a fulfilled society that is safe, secure, efficient and fair.

In order to realize this plan, NEC concluded that a subordinated loan is the most efficient means for improving and stabilizing the balance sheet, as well as increasing the flexibility and speed of strategic investment. This financing will help to reinforce the financial base and to make investments in solutions for society, including Software-Defined Networking (SDN), Smart Energy and Safety.

The funds procured from these subordinated loans are planned to help repay existing interest-bearing liabilities and to finance business that is necessary for implementing the Mid-term Management Plan 2015.

2. Characteristics of this subordinated loan

This subordinated loan is hybrid financing with features that are midway between equity and debt. Although it is debt, it has aspects and characteristics of equity such as optional deferral of interest payments, an especially long repayment period, subordination with respect to liquidation and bankruptcy proceedings and the like. It is expected that Rating and Investment Information, Inc. (the "Ratings Institution") will recognize 50% of the total value of the financing as equity credit attributes for the purpose of rating.

3. Overview of this subordinated loan

  1. Amount to be borrowed     130 billion yen

  2. Drawdown date     May 1, 2013

  3. Due date     the last day of June, 2073

  4. Replacement clause
    In case of an early repayment of this subordinated loan, NEC intends to raise the funds, within the 12-month period before the date on which it will make that early repayment, by equity or other securities or debts that have been approved by the Ratings Institution as having equity credit attributes equal to or greater than this subordinated loan, so that the amount with the equity credit attributes of the raised funds is more than the amount with the equity credit attributes of that early repayment

  5. Constraints on interest payment
    NEC may, at its discretion, defer all or some of the payment of interest on this subordinated loan.

  6. Subordination
    This subordinated loan is subordinated in liquidation proceedings, bankruptcy proceedings, reorganization proceedings and rehabilitation proceedings.

  7. Prohibition of changes disadvantageous to senior lenders
    The terms and conditions of the agreement on this subordinated loan may not be changed in any respect whatsoever to the disadvantage of creditors of NEC, other than those with subordinated claims (meaning this subordinated loan and the claims on NEC with the conditions equal in substance to the subordination stipulated in the above (6)), and no agreement on any such change will affect in any way whatsoever any such person.

  8. Expected equity credit attributes of this subordinated loan evaluated by the Ratings Institution
    Class 3, 50% (Rating and Investment Information, Inc.)

  9. Investors (lenders) participating in this subordinated loan

      Sumitomo Mitsui Banking Corporation
      Sumitomo Mitsui Trust Bank, Limited
      The Bank of Tokyo-Mitsubishi UFJ, Ltd.
      Mizuho Corporate Bank, Ltd.
      Development Bank of Japan Inc.



This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services, and business performance of NEC Corporation and its consolidated subsidiaries (collectively "NEC"). Written forward-looking statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the Director of the Kanto Finance Bureau, and in reports to shareholders and other communications. NEC is relying on certain safe-harbors for forward-looking statements in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates," "targets," "aims," or "anticipates," or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them. You should not place undue reliance on forward-looking statements, which reflect NEC's analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements include (i) global economic conditions and general economic conditions in NEC's markets, (ii) fluctuating demand for, and competitive pricing pressure on, NEC's products and services, (iii) NEC's ability to continue to win acceptance of NEC's products and services in highly competitive markets, (iv) NEC's ability to expand into foreign markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC's business and operations, (vi) NEC's ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, (vii) movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar, (viii) the impact of unfavorable conditions or developments, including share price declines, in the equity markets which may result in losses from devaluation of listed securities held by NEC, and (ix) impact of any regulatory action or legal proceeding against NEC. Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise.
The management targets included in this material are not projections, and do not represent management's current estimates of future performance. Rather, they represent targets that management will strive to achieve through the successful implementation of NEC's business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. Securities may not be offered or sold in any jurisdiction in which required registration is absent or an exemption from registration under the applicable securities laws is not granted.

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