Elpida Memory Inc <6665.T>, the world's No.3 maker of DRAM memory, plans to raise 80 billion yen ($992 million) by issuing new shares and convertible bonds, three sources close to the matter told Reuters.
The company's board will agree on Monday to endorse a share issue worth 50 billion yen, equivalent to around a quarter of the firm's current market value, and convertible bonds amounting to 30 billion yen, the sources said.
Shares of the company slumped more than 10 percent to 814 yen after Reuters' reported what will be the biggest equity financing in Japan since the March 11 earthquake.
A spokesman for Elpida said he could not immediately comment on the issue.
The company plans to use the money to invest in the production and development of memory chips for smartphones tablet PCs and other devices, the sources said.
Elpida in May said it planned to cut capital spending this year by 32 percent to 80 billion yen, and focus on shifting production to its advanced 30-nanometre and 25-nanometre lines instead of on volume expansion.
Elpida, Japan's sole maker of dynamic random-access memory, faces a slump in demand for PC memory chips.
In the January-March quarter the company posted a quarterly operating loss of 5.2 billion yen, against a profit of 37.8 billion yen the previous year.
(Additional reporting by Kentaro Hamada; Writing by Tim Kelly; Editing by Michael Watson and Joseph Radford)