Sharp Said to Plan 10,000 Job Cuts, Factory Sales to Foxconn

Sharp Corp. (6753) plans to cut more than 10,000 jobs, or about 18 percent of its workforce, and is in talks to sell plants as the Japanese TV maker tries to return to profit, two people with knowledge of the proposal said.

The job cuts and sales of television factories in Mexico, China and Malaysia and U.S. solar developer Recurrent Energy LLC were in the plan Sharp presented to its lenders Sept. 24, the people said, declining to be identified because the matter isn’t public. Sharp is negotiating with Foxconn Technology Group to dispose of the three plants, the people said.

Sharp, reeling from record losses and facing hurdles in selling shares to Foxconn, submitted the proposals to its main banks Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc. (8306), seeking support on refinancing commercial paper and other debt, two people with knowledge of the matter said this week. The banks will contribute to a total of about 360 billion yen ($4.6 billion) in loans, the people said.

Miyuki Nakayama, a Sharp spokeswoman based in Tokyo, declined to comment. Resona Holdings Inc. (8308) and Nippon Life Insurance Co. may join in providing loans, one of the people said.

Sharp closed unchanged at 207 yen in Tokyo today. The shares have declined 69 percent this year.

Asset Sales

Kyodo News reported yesterday that Sharp will cut a total of 10,966 jobs and raise 213 billion yen by selling assets, including overseas factories and shares in Toshiba Corp. The job cuts include the 5,000 announced by Sharp last month.

Simon Hsing, a spokesman for Foxconn flagship Hon Hai Precision Industry Co., declined to comment today.

Sharp wants to raise 38 billion yen from selling the plants, 25 billion yen from Recurrent Energy, 3 billion yen from its Tokyo office building and 1.6 billion yen from its Toshiba stake, Kyodo reported yesterday, without saying where it got the information.

The company agreed in 2010 to buy closely held Recurrent for as much as $305 million in cash. Recurrent installs, owns and operates solar-power systems and sells the generated electricity to utilities, municipalities and businesses.

Sharp also is considering combining its mobile-phone unit with Fujitsu Ltd., Kyodo reported today. Masahiro Yamane, a Tokyo-based spokesman for Fujitsu, said the company “hasn’t heard anything from Sharp.”

Payroll Cuts

Sharp will delist its shares from bourses in three Japanese cities, including Sapporo and Fukuoka, the company said in a statement today. The company reached an agreement with its union about payroll reductions and job cuts, which were announced earlier, Sharp said in a separate statement.

Sharp has put up properties including its headquarters as collateral to raise funds. The maker of Aquos TVs has turned to lenders for financial support as it struggles to refinance its debt after Standard & Poor’s and Moody’s Investors Service cut its credit ratings to junk.

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.

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 plans to return to profit next fiscal year with the help of job cuts and cost reductions, President Takashi 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.

Sharp had 56,756 employees as of March 31, according to data compiled by Bloomberg.

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