It was a long time ago that Sony sued a chocolate maker for its name. It was a landmark case driven by the concept of brand dilution. The fact that nobody could find Sony in any dictionary, gave Sony the rights to its name across the planet way before global was a business adjective. Back then, Sony was a mere transnational.
Sony was the first Japanese company to sell stock in a US market. It conquered the Americas and later boasted of their disciplined character when raising debt.
Fast forward at least 30 years, and a Sony debt offering causes the stock to plunge. The markets have reacted as if a wet cat just jumped on the table.
It is convertible offering for common stock at a premium price in 5 years. The problem is not a subtle matter of the right capital-debt ratio that might not serve their wise investors well. It is one of those rare offering where every possible outcome is bad. Without anywhere to look, investors headed for the exit of the house of mirrors.
If Sony gets in serious trouble, getting common stock for debt is like loosing the whole investment. Debt gets serviced first.
If Sony reaches a premium in 5 years, and the debt is converted, it would be an additional 15% dilution for the stock. So the stock plunges.
If Sony does revamps its facilities and comes out ahead with "taking names" products, it might be better to keep the debt given the high yield it will carry instead of an unpredictable and diluted stock price.
A good place to start might be to get a good read on the market for their offering before sitting at the gambling table of the consumer electronic tournament trying to take back their old global spot.
