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Sony to raise $1.9 billion through convertible bonds (update)

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Sony makes big money with convertible bonds

Japan's Sony Corporation is set to raise $1.9 billion by selling convertible bonds, a third of which will be invested in the Olympus Corporation while the rest goes toward paying off Sony's acquisition of cloud entertainment service Gaikai, repaying debts and paying for a planned ramp-up in CMOS image sensors.

Convertible bonds are a type of bond that can be converted into shares of common stock or for cash of equal value. Sony has hired a number of financial firms to handle the offering, including JPMorgan Chase & Co, Goldman Sachs, Nomura Holdings and SMBC Nikki Securities.

Sony Computer Entertainment bought Gaikai in July for $380 million. The company said at the time that its collaboration with Gaikai would "deliver a world class streaming service that allows users to instantly enjoy a broad array of content ranging from immersive core games with rich graphics to casual content anytime, anywhere on a variety of internet-connected devices." It has not yet announced when the first Sony-run Gaikai services will be made available.

Update: Sony's shares fell 10.7 percent today after it announced its intention to raise $1.9 billion through the sale of convertible bonds to fund its investments. According to Reuters, Sony's share price plunged to 777 yen, the lowest close it has had since 1980.

A credit sector specialist at Citigroup in Tokyo, Katsuhide Takahashi told Reuters: "Worries of dilution are pushing shares down today ... In a way, the fact that Sony can issue corporate bonds and access the market is positive, in comparison to its peers that can't even do that like Sharp. From an equity perspective, there are worries of dilution but on a credit front this is positive."