Headquartered in Stockholm, Veoneer is planning to sell its bonds and shares worth $500 million in an effort to boost its working capital, Reuters reported. Veoneer is a pioneer in manufacturing state-of-the-art software and hardware for autonomous driving and brake control.
The company said in a statement on Monday that it will offer $350 million worth of common shares and $150 million of convertible senior notes maturing in 2024.
It appears that factors such as weak car market, in-depth R&D, and high engineering costs have led to the automobile industry’s slow sales and heavy losses. Many companies manufacturing advanced driver assistance and autonomous drive software have been affected.
Against this background, Veoneer is forced to raise a new round of capital in spite of a $19 billion order book. The company said, “Veoneer intends to use the net proceeds from the common stock offering and concurrent convertible notes offering for working capital and other general corporate purposes.
Last month, Veoneer said it plans a working capital up to $500 million in order to cope with the industry’s slump. Another reason for it to raise fresh capital is to be able to fun new product development. However, the company did not delve into further details.
Reuters said that Veoneer’s shares in Sweden fell on Tuesday but were trading 8.9 percent higher by 0744 GMT. Handelsbanken Capital Markets analyst Hampus Engellau, said, “This has been somewhat of a wet blanket, and with details now out I don’t think it’s that strange that shares are rising.”
“Perhaps their transparency around the order book, standing at $19 billion, is starting to sink in,” he added.
Veoneer competes with the likes of Aptiv, Continental, and Bosch. It also supplies to industry majors like Daimler, Volkswagen, Ford and Honda among others.