Hitachi shares head for biggest drop in 6 months

By Mayumi Negishi

TOKYO (Reuters) - Shares of Hitachi Ltd, Japan's biggest electronics firm by revenue, were headed for their biggest single-day slide in six months after sources said it would raise up to $4.5 billion to shore up its battered capital base.

Two sources familiar with the matter told Reuters over the weekend that Hitachi plans to sell about 300 billion yen worth of shares and another 100 billion yen in convertible bonds.

News of the public share offering, which would be Hitachi's first in 27 years, sent its shares down 8.5 percent, underperforming a 1.4 percent fall in Tokyo's electrical machinery index .

Hitachi said in a statement that it would make an announcement if any decision were reached.

Hitachi, a sprawling conglomerate with more than 900 group firms, is joining a scrum of Japanese companies tapping equity markets before a possible slowdown in the economy.

But Hitachi has been forced to seek money before it could form a realistic plan for recovery, some analysts said.

"This amount is the absolute limit that Hitachi can seek from markets, but this may not be enough even to cover restructuring costs at such a mammoth firm, let alone invest in growth," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.

"I don't think investors will want to put their money in. There are so many more deserving companies that need funds."