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Sharp’s Two Main Banks Said to Plan Approval of Revival Package

Sharp Corp. (6753)’s two main banks plan to approve a revival package submitted today by the Japanese electronics maker and will contribute to a total of about 360 billion yen ($4.6 billion) in loans, according to two people with knowledge of the matter.

Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc. (8306) plan to approve the package by Sept. 30, the people said, asking not to be identified before an announcement. Resona Holdings Inc. (8308) and Nippon Life Insurance Co. may join in providing the loans, Kyodo News reported earlier today, without citing anyone.

Sharp, which is renegotiating a stake sale to Foxconn Technology Group, is proposing job cuts and payroll deductions in its revival plan, Kyodo said. Heihachiro Ochiai, a spokesman for Sharp, declined to comment. Masako Shiono, a spokeswoman at Mizuho, and Hironori Imafuku, a spokesman at Mitsubishi UFJ, declined to comment.

Sharp President Takashi Okuda is cutting 5,000 jobs and has put up properties as collateral to raise funds as the company projects a second consecutive annual loss. The maker of Aquos TVs has turned to lenders for financial support as commercial papers come due and after Standard & Poor’s and Moody’s Investors Service cut its credit ratings to junk.

The electronics maker has been renegotiating terms for a proposed stake sale to Taipei-based Foxconn after widening its full-year loss forecast eightfold in August, triggering a slide in its share price. Foxconn agreed in March to invest 67 billion yen for a 9.9 percent stake in Sharp at 550 yen a share.

Sharp’s Debt

The company had 706 billion yen of short-term debt maturing within 12 months and 314 billion yen in long-term debts at the end of June, according to its latest quarterly financial statement. Sharp’s cash and near-cash stood at 218 billion yen at the time.

Sharp fell 2.8 percent to 206 yen at the 3 p.m. close of trade in Tokyo. The shares have declined 69 percent this year, making it the biggest loser among more than 1,600 companies in the MSCI World Index. (MXWO)

Sharp plans to return to profit next fiscal year with the help of job cuts and cost reductions, Okuda said Sept. 14. The company is trimming its workforce and planning to reduce wages, managers’ salaries and bonuses to lower costs by 14 billion yen, it said earlier this month. The cuts are in addition to a 100 billion-yen reduction in fixed costs Sharp announced in August.

To contact the reporters on this story: Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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