Sharp Rises Most in 38 Years as Debt Repayment Concerns Ease
Sharp surged as much as 24 percent, the biggest gain since at least 1974, and traded at 325 yen at the 11:30 a.m. break, heading for the highest close since July 13. Sharp has declined 52 percent this year, the biggest drop on Japan’s benchmark Nikkei 225 Stock Average (NKY), which has gained 18 percent.
The TV maker, which said last month there was “material doubt” about its ability to survive, reached an agreement this month to sell as much as 9.9 billion yen ($118 million) of shares to San Diego-based Qualcomm Inc. (QCOM) Sharp turned to the biggest maker of mobile-phone chips after failing to get a planned 67 billion-yen investment from Taiwan’s Foxconn Technology Group and hemorrhaging 103 billion yen in cash from operations in the fiscal first half.
“There was an investment from Qualcomm and a report on getting more banks for its lending plan,” Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo, said today. “That’s clearing some of the concerns over Sharp’s ability to repay debt. It seems more attention is focused on possible earnings improvements than on bankruptcy risks.”
Sharp warned Nov. 1 about its ability to survive after forecasting a record 450 billion-yen, full-year loss because of sluggish demand for its panels. The company posted a record 376 billion-yen loss in the fiscal year ended March 31.
Japan’s largest liquid-crystal-display maker has 395 billion yen of notes outstanding, including 200 billion yen of convertible bonds due September, according to data compiled by Bloomberg. The bonds were quoted at 77.15 yen per 100 yen face value as of 11:16 a.m. in Tokyo today, the highest level since Aug. 30, according to Tokyo Stock Exchange prices.
Resona Holdings Inc. (8308) will join Japanese lenders offering 360 billion yen of emergency loans to Sharp, three bank officials with knowledge of the matter said Dec. 11.
Sharp, which is cutting more than 10,000 jobs, secured 180 billion yen in collateralized loans through its main lenders Mizuho Corporate Bank Ltd. and Bank of Tokyo-Mitsubishi UFJ Ltd., it said Sept. 28. Osaka-based Sharp also got a 180 billion-yen credit facility that expires at the end of June.
Fitch Ratings cut Sharp’s credit rating to junk last month, saying it doesn’t foresee “any meaningful operational turnaround in the company’s core business over the short- to medium term.”
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