April 26, 2013 / 5:35 AM / 5 years ago

UPDATE 2-NEC secures $1.3 bln funding from banks

TOKYO, April 26 (Reuters) - Japanese electronics maker NEC said on Friday it has secured $1.3 billion in subordinated loans from a group of lenders including Sumitomo Mitsui Banking Corp and Development Bank of Japan as it sheds loss-making operations amid turnaround efforts.

The funding will strengthen its balance sheet since half of subordinated loans is accounted toward capital by a ratings agency, the company said in a statement. It said it would use the fund raised to pay back debts and finance business activities.

The company reported a net profit of 30.4 billion yen for the year ended in March, a sharp swing from 110.3 billion loss a year earlier.

The company, which makes PCs, mobile phone handsets and servers, has been undergoing major restructuring of its business portfolio as it bets its future on IT services.

The company is in talks to sell its struggling mobile phone unit to its personal computer venture partner Lenovo Group Ltd , a source has told Reuters.

The company’s mobile phone handsets and other consumer products lag far behind in scale to compete against global leaders like Samsung Electronics and Apple.

NEC said it only sold 2.9 million mobile phones for the year ended in March, falling short of its target of 4.3 million units.

SMBC, a core unit of Sumitomo Mitsui Financial Group and NEC’s main lender, and four other banks will together provide 130 billion yen ($1.3 billion) in subordinated loans.

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