According to the latest news report by Bloomberg, Pioneer Corp. has agreed to get bailed out by Baring Private Equity. Once upon a time, Pioneer was a technology giant, one of the hottest names in the market. However, the company has since succumbed to debt as well as expansions that ended in failure and is now struggling just to stay alive.
Now, according to a filing made yesterday, Baring Private Equity is going to purchase as much as ¥60 billion (~$538 million) worth of Pioneer’s stock. However, as the news broke, Pioneer concurrently announced that this deal was not legally binding, after which shares dropped by 9.3% which is the lowest the company’s stocks have fallen in the last 9 years.
Executives did tell the media that they were hoping to made this a legally binding deal by October.
In the 1980s, Pioneer was one of the top brands for car as well as home stereo systems. Unfortunately, the company did not do well with its expansions and ended up deeply in debt. In fact, just last month, Pioneer has expressed its uncertainty about being able to stay alive much longer as it heads towards its first full-year operating losses.
Pioneer is therefore going to take out a ¥25 billion (~$220 million) bridge loan so that it can continue operations till it has been able to sell its shares. Pioneer also plans to continue trading as a publically listed company.
According to the Chief Executive Officer of Pioneer, Koichi Moriya, this bailout is the first step for Pioneer as a company reborn. Moriya also stated that they were working together as a team to ensure that they can get the official contract by the end of next month and can then start work on a restructuring plan. He also said that in 5 to 7 years, he hoped that Pioneer would reverse itself and start growing again.
Pioneer, like its name, pioneered some of the biggest innovations in the industry in its time. The Japan based company was instrumental in changing the concept of karaoke as well as home entertainment in the 1980s and brought in laser discs. The company also invested in plasma TVs and even introduced the world’s first OLED commercial display for car stereos back in 1999.
Unfortunately, Pioneer was not able to build a strong market in those product segments, and ended up lagging behind due to changes in technology which it could not keep up with. Now, according to the data collated by Bloomberg, the Japanese technology giant has a total outstanding debt of ¥50.3 billion (~$450 million).
In recent times, Pioneer has been attempting to move out of its current market and gain entry into the autonomous car market. The company has been eyeing the car navigation and visualization systems segment of the autonomous car market.
Last year, the Japanese technology company developed a new type of lidar – a combination of laser and radar technology, with the aim of driving its expansion into the nascent but growing market of autonomous cars.
The challenge that Pioneer has been facing is that the lidar market is projected to be worth around $1.34 billion by the year 2024, but is already getting crowded with the likes of Velodyne Lidar Inc. and LeddarTech Inc. joining the battle for supremacy.
The company believes that it can have a positive impact on the autonomous car market as it has a great deal of experience both in the optical field as well as the navigation field.
According to Moriya, self-driving cars need maps and they are the only company in the world that has come up with a business strategy that is based on map technology.