Sharp Works on Contingency Plan for Bank Funding to Repay Debt

Sharp Corp. (6753), the Japanese electronics maker renegotiating a stake sale to Foxconn Technology Group, is working on a contingency plan to present to banks as the company faces a deadline for repaying debt.

“We’ve been discussing revival measures and studying our business portfolio,” Tetsuo Onishi, senior executive managing officer in charge of accounting, told reporters in Osaka today. Getting no investment from Foxconn “is a risk factor that needs to be included,” in the plan, he said.

The maker of Aquos TVs, trying to raise cash after widening its loss forecast eightfold last month, plans to submit revival measures to its lenders later this month, spokeswoman Miyuki Nakayama said by phone. Sharp mortgaged most of its domestic properties, including its Osaka headquarters and some factories, and is cutting 5,000 jobs as part of a restructuring amid slumping demand for its sets.

Nakayama declined to comment on details of the plan.

Sharp’s shares rose 3 percent to 206 yen at the close of trading in Tokyo, reversing earlier losses. The stock has tumbled 69 percent so far this year, making it the worst performer on the MSCI World Index.

March Agreement

Sharp put up properties as collateral while seeking as much as 150 billion yen in loans from Japan’s Mizuho Corporate Bank Ltd. and Bank of Tokyo-Mitsubishi UFJ Ltd., it said yesterday.

Sharp’s main lenders plan to arrange as much as 300 billion yen ($3.8 billion) in financing for Sharp with or without Foxconn’s capital injection, Reuters reported earlier today.

Nakayama and Simon Hsing, a spokesman for Taipei-based Foxconn’s Hon Hai Precision Industry Co., declined to comment on the Reuters report.

Foxconn agreed in March to buy 9.9 percent of Sharp for 67 billion yen in a sale of new shares at 550 yen apiece. Sharp’s shares plunged to the lowest level in 37 years, prompting the Taiwanese group to renegotiate the price for its stake.

A schedule for Sharp President Takashi Okuda to meet with Foxconn’s Chairman Terry Gou hasn’t been set, Onishi said.

Japan’s biggest maker of liquid-crystal displays is in talks with potential lenders, including life insurance companies, for a syndicated loan, a person with knowledge of the matter said last week.

Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc., Sharp’s two main banks, provided the company with a short-term facility of 60 billion yen in July and an approximately 150 billion-yen credit last month to help the company refinance its commercial papers, according to another person with knowledge of the matter.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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