Pioneer agreed to a 60 billion yen ($538 million) bailout from Baring Private Equity Asia (BPEA.)
Baring will buy 50-60 billion yen billion yen of stock in the Tokyo-based company, Pioneer said.
Following the bailout and according to the agreed MOU, BPEA will respect "autonomy and agility" of the management of the Pioneer Group and will cooperate in reforms necessary for increasing the corporate value of the Group.
In addition, the common shares of Pioneer will remain listed, Pioneer and its subsidiaries will maintain their current trade names and brands "unless the circumstances change otherwise."
"Today is the first step toward a Pioneer reborn," Chief Executive Officer Koichi Moriya said at a briefing in Tokyo. "We are working as one to clinch the official contract by the end of October and come up with a restructuring plan. In five to seven years we can be growing again."
BPEA is an international private equity firm that advises seven funds with over US$16 billion of commitments under management.
Pioneer has been a respectable brand, which made its name by offering high-quality home and car stereo systems. The company was also the "pioneer" in the developemnt of DVD recorders and otehr optical storage technologies. However, it has struggled for years after failed expansions into new markets left it saddled with debt.
Pioneer also helped change karaoke and home entertainment in the 1980s with laser discs, invested heavily in plasma televisions and introduced the world's first commercial OLED display for a car stereo in 1999.
More recently, the company has focused on car navigation. DJ equipment and visualization systems as it seeks to break into the autonomous car market.