*
New share issue to be priced between May 24 and 29
*
Shares slump for second day after Reuters reports share
issuance
plan
*
About $1.6 bln in stock value wiped out since report
*
(Adds share dilution, pricing date in paragraph 4, S&P comment
in paragraph 8)
TOKYO, May 16 (Reuters) - Japan's Rakuten Group Inc said on Tuesday it aimed to raise up to 332 billion yen
($2.46 billion) by issuing new shares, marking the latest step
by the loss-making e-commerce and fintech company to fortify its
finances.
Rakuten said in a statement it aimed to raise about 290
billion yen via a public offering and another 41.8 billion yen
through allocations to founder and CEO Hiroshi Mikitani, his
asset management firm, CyberAgent Inc and Tokyu Corp .
Its shares fell 5.1% on Tuesday ahead of Rakuten's
announcement, extending the previous day's tumble after Reuters
reported the plan that is aimed at improving its financial
position after years of losses from its mobile business.
Prospects of a share dilution led to the stock's biggest
one-day drop in three years on Monday. Rakuten aims to issue
about 547 million new shares, diluting the value of current
shareholders' holdings by about 34%. It will price the new
shares sometime between May 24 and 29, it said.
Rakuten's market capitalisation has fallen about $1.6 billion since the Reuters report.
"Whenever there is a large sale of new equity, that is dilutive but it also forces decisions about whether to hold. Some will be upset and will sell," said analyst Travis Lundy of Quiddity Advisors, who publishes on Smartkarma. Rakuten said it would use the funds for debt repayment and to build base stations. "If Rakuten raises funds as planned, we believe it can mitigate deterioration to its finances stemming from its unprofitable mobile business and associated capital expenditures," S&P Global Ratings said. The company last week posted a quarterly loss and said it would sell its stake in supermarket chain Seiyu to U.S. private equity firm KKR & Co Inc for 22 billion yen, just three years after agreeing to buy the shares from Walmart Inc. That followed an initial public offering last month of its banking unit, while the company also plans to list its brokerage arm. ($1 = 135.0500 yen) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Rakuten shares' total returns ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Sam Nussey and Chang-Ran Kim; Editing by Cynthia Osterman and Muralikumar Anantharaman)
