NEC Corp, Japan's largest computer seller, has said it will lend $300 million to Packard Bell NEC Inc and boost its stake in the US's second-largest computer seller to 49 per cent by converting preferred shares to common shares.
The loan is to support Sacramento, California-based Packard Bell NEC, which has been hurt by falling prices of home computers, said Mr Seijiro Yokoyama, a NEC vice-president. He added that the US company needed to cultivate the corporate market.
"The loan is part of the global strategy of NEC to be the number one computer seller in the world," Mr Yokoyama said.
NEC and Packard Bell NEC together control 10.2 per cent of the world computer market, the second largest share after Compaq Computer of the US, which controls 10.3 per cent, NEC said, citing a survey by Massachusettsbased International Data Corp.
Mr Yokoyama said part of the loan is to be repaid from cash raised through an initial public offering in Packard Bell NEC scheduled for this year.
He also said the US unit will generate enough profit to repay the rest.
Currently, Tokyo-based NEC owns 19.84 per cent of Packard Bell NEC. French computer company Cie des Machines Bull, which is going to guarantee 20 per cent of the $300 million loan, also owns 19.84 per cent. Its share will fall to 12.62, Mr Yokoyama said.
