4 months ago The carmaker said it will instead use the funds to pay down debt, invest in its brands, and continue building its global business.
Toyota is using a combination of cash from its $1.8 billion convertible bonds, a $3.5 trillion stock option program, and an $800 million loan from Japan’s Mitsubishi Corp. to fund the plan.
That combination of borrowing and debt has allowed the company to pay off debt and refinance a record $1 trillion in debt over the past decade.
But it’s also meant that it’s had to borrow against future cash flows to build up its cash reserves, which has helped to keep the carmaker’s profitability steady.
It’s been less than stellar over the last year or so, and that is likely to continue, according to analysts.
Toyota’s new bond program was announced as part of a wider restructuring that will see the company slash $10 billion from its financials and increase its debt.
In a note to investors, Toyota said the debt restructuring was a key reason it decided to focus its $9 billion convertible bond program on financing its operations, as it would have done with any other debt it might be saddled with.
The move comes as Toyota struggles to regain momentum after a series of poor financial results in the last several years.
It also comes as the company prepares to unveil a brand new vehicle for the 2020 Tokyo Olympics.
The company also said it would be buying more debt to keep its cash flow up as it continues to build its brands.
As part of its plan, the company plans to issue $1 billion in new convertible bonds and also purchase a $300 million loan.
Toyota’s $1,600 per-share bond program, announced last month, was the company’s first since it began to issue bonds in 2011.
“Toyota is in a strong position for its future and we remain committed to being a leader in the auto industry,” Toyota’s Chief Financial Officer Kenichiro Kobayashi said in a statement.
“We are focused on capitalizing on the strengths of our brand, expanding our operations, and improving our profitability.
We are committed to our long-term strategy and are confident in the future of the company.”