Japanese supermarket operator Seiyu, an affiliate of US retail giant Wal-Mart Stores, has said it plans to issue ¥7.735bn (US$65.2m) worth of new shares to avoid falling into negative net worth.
Seiyu said it would issue the 35 million new shares at the end of August. Wal-Mart is to buy ¥4.46bn worth of the new shares, increasing its stake in Seiyu to 37.8% from 36.6%.
Wal-Mart International’s director of corporate affairs, Billie Cole, said the extra capital was needed because of Seiyu’s poor performance in the year to February.
“Because of missing targets previously, we really needed to address some capital issues. With this and some more aggressive focus on sales in the second half of the year, we think Seiyu will be on track to reach those long-term goals,” he was quoted by Reuters as saying.
Seiyu, which operates 400 stores across Japan, posted a net loss of ¥90.84bn in the year to February.
“Some of the most recent results are a disappointment for Seiyu and Wal-Mart, but I think everybody is really focused on a good, long-term partnership,” Cole said. “A move like this just shows Wal-Mart’s confidence in the partnership.”