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Sharp Said to Consider Seeking Buyout Fund Investment

Sharp Corp. (6753), the Japanese electronics maker forecasting a record loss, is considering seeking investments from private equity funds to replenish dwindling cash, two people familiar with the matter said.

The company is also considering selling shares to the public, the people said, asking not to be identified as the discussions are private. Details of the funding will possibly be included in Sharp’s mid-term plan, which may be released in early May, the people said. The shares fell.

Sharp’s cash pile tumbled to 164 billion yen ($1.7 billion) as of Dec. 31, the lowest level based on records stretching back to 1992, amid slumping earnings. The Osaka-based company, bracing for 200 billion yen of convertible bonds maturing this year, has agreed to sell stakes to Qualcomm Inc. (QCOM) and Samsung Electronics Co. A deadline for an investment from Foxconn Technology Group expired yesterday without a deal.

“The funding issue will continue to be a focus for Sharp going forward,” said Koki Shiraishi, an analyst at SMBC Nikko Securities Inc. “It may be hard to raise funds through a public offering of common shares, given the current stock price and investors’ sentiment,” he said.

Sharp fell 3.6 percent to 268 yen at the close in Tokyo trading today, the lowest since Dec. 13. Japanese exporters including Sony Corp. and Canon Inc. (7751) also declined as the yen strengthened, dragging the benchmark Nikkei 225 Stock Average down 1.3 percent.

Photographer: Tomohiro Ohsumi/Bloomberg

Attendees look at a Sharp Corp. liquid crystal display (LCD) television at the CEATEC Japan 2012 exhibition in Chiba. Close

Attendees look at a Sharp Corp. liquid crystal display (LCD) television at the CEATEC... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

Attendees look at a Sharp Corp. liquid crystal display (LCD) television at the CEATEC Japan 2012 exhibition in Chiba.

“Sharp is looking at various measures to raise funds,” spokeswoman Miyuki Nakayama said by phone yesterday, declining to elaborate.

Earnings Focus

Sharp is also trying to develop business alliances and include them in its next business plan to revive earnings, one of the people said.

In September, Sharp signed an agreement with Japanese banks for a 360 billion yen loan. The company secured 30 billion yen in funds from three banks this month, three people familiar with the matter said March 14.

Five straight quarters of losses eroded Sharp’s equity to 10 percent of its assets by the end of 2012, compared with 30 percent a year earlier. Japanese manufacturers including Olympus Corp. (7733) and Mazda Motor Corp. (7261) sold new shares last year to protect their credit ratings after their so-called equity ratio fell below 20 percent.

In December, Sharp said Qualcomm, the biggest maker of mobile-phone chips, would pay as much as 9.9 billion yen for a stake and would cooperate on display technology.

Samsung, the world’s biggest smartphone maker, said March 6 it would spend 10.4 billion yen buying Sharp stock to secure a supply of liquid-crystal displays.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Emi Urabe in Tokyo at eurabe@bloomberg.net

To contact the editor responsible for this story: Robert Fenner at rfenner@bloomberg.net

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