Sharp Corp. (6753) may announce a public share sale and third-party allotment to bolster its balance sheet as early as next week, according to Japanese media reports.
The company plans to raise as much as 200 billion yen ($2 billion), with up to 10 billion yen each of stock to be sold to Makita Corp. (6586), Denso Corp. (6902) and Lixil Group Corp. (5938), Yomiuri said, without attribution. The share sale may be worth 170 billion yen next week, Kyodo reported.
Sharp is trying to rebuild its balance sheet after intensifying competition in liquid-crystal displays and flat-panel televisions drove it to consecutive losses totaling 921 billion yen during the past two financial years. The 100-year-old company, which supplies screens for Apple Inc. iPads and iPhones, has raised funds since last year in minority stake sales to Samsung Electronics Co. and Qualcomm Inc. (QCOM)
“Sharp is considering raising money through public offering and is in negotiations for third-party allocation, but nothing has been decided,” Hiroshi Takenami, a spokesman for Osaka-based Sharp, said by phone today.
The stock fell 6 percent to 363 yen as of 1:20 p.m. in Tokyo, headed for its biggest drop since July 29. The shares have climbed 20 percent so far this year, trailing the 38 percent rise in Japan’s benchmark Topix index.
Sharp last month delayed a plan to raise about 100 billion yen from public and private share sales because of concern with the company’s growth prospects, two people with knowledge of the matter said, asking not to be identified because the matter is private.
Last month, Sharp reported a net loss of 18 billion yen in the three months ended June, narrower than the 138 billion-yen loss a year earlier. Its ratio of equity to total assets was 6 percent at the end of the period.
“Sharp must do a public offering this fiscal year,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “It’s earnings are still not stable, and its equity ratio is very low.”
Operating profit, or sales minus the cost of goods sold and administrative expenses, totaled 3 billion yen for the quarter, compared with a loss of 94 billion a year earlier, the company said. Sales rose 33 percent to 608 billion yen.
The operating loss at the LCD unit narrowed to 9.5 billion yen during the quarter, from a loss of 63.5 billion yen a year earlier, according to the company. The audio-visual and telecommunications unit, which sells TVs and mobile-phones, also narrowed its loss, while the solar-panel division turned profitable.
Sharp has 200 billion yen of convertible bonds maturing at the end of this month, according to data compiled by Bloomberg. Its debt is rated B+ by Standard & Poor’s, which is four levels below investment grade.
The electronics maker is forecasting net income of 5 billion yen for the year to March 2014, its first annual profit in three years, after job cuts. The company sold a stake in its largest LCD plant to Taiwanese billionaire Terry Gou last year to boost sales through his Foxconn Technology Group, the world’s biggest contract manufacturer of electronics.
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