Mazda plans $2.1bn capital raising Mazda, the Japanese carmaker, is planning to raise about Y170bn ($2.1bn) in capital by issuing new shares and taking on subordinated debt, according to people familiar with the matter. Shares in the Hiroshima-based company closed 10 per cent lower on the Tokyo Stock Exchange on Tuesday after Japanese media reported the plan. Investors fear a share issue, which the people said would account for about Y100bn of the fundraising, would dilute the value of existing shareholders" stakes at least in the short term. Mazda is believed to need the capital to expand its production network overseas. Unlike larger Japanese rivals such as Toyota, Honda and Nissan, which have been building factories in the US and other foreign markets for decades, Mazda makes almost all of its cars in Japan. The situation has become untenable with the recent rise in the yen to record highs against the US dollar and the euro. This month Mazda warned it would suffer a Y100bn net loss in the accounting year ending in March - much deeper than the Y19bn loss it had previously forecast. It would be the company's fourth consecutive year in the red. The strong yen hurts Japanese exporters by increasing their production costs relative to the revenue they generate through overseas sales, and by shrinking the value of any profits they repatriate from abroad. Toyota and Nissan, Japan's two biggest carmakers, have themselves called for more aggressive official action to curb the strength of the yen. Mazda lost its main foreign production foothold when Ford backed out of the companies" three-decade capital alliance in 2008. The groups have jointly operated a factory in Michigan since the late 1980s, but began talks to dissolve the venture last year. In October, Mazda broke ground on its first solely owned foreign assembly plant, in the Mexican state of Guanajuato. It is funding the estimated $500m construction cost by bringing in Sumitomo Corp, the Japanese trading company, as an equity partner in the plant. Mazda is looking to add even more overseas factories, with the aim of raising its foreign production ratio to 50 per cent by March 2016 - roughly on a par with Toyota's ratio today. In a statement, Mazda said Tuesday's reports that it will raise funds "did not come from the company" and that "nothing concrete has been decided." According to people with knowledge of Mazda's plans, the carmaker intends to issue about Y100bn of shares and take a Y70bn subordinated loan from Sumitomo Mitsui Bank, its main creditor and a corporate cousin of Sumitomo Corp, as well as from several other Japanese lenders. "The balance of shares and loans could change, depending on how many shares they're able to sell," one of the people said, adding that Mazda and the banks are currently in the final stages of talks over the plan. Mazda last embarked on a major fundraising in 2009, issuing Y96bn in new shares to fund development of new engine technologies.