Sharp may get new help from creditors: media

PUBLISHED : Thursday, 23 August, 2012, 9:13am
UPDATED : Thursday, 23 August, 2012, 3:52pm

Sharp Corp’s main creditors Mizuho Corporate Bank and Mitsubishi UFJ Financial Group are considering extending about 200 billion yen (US$2.52 billion) in new loans to the struggling TV maker, Japanese media reported, sending its shares higher on Thursday.

The embattled company, with debt of 1.25 trillion yen (US$16 billion), is scrambling for money to refinance as much as 360 billion yen of short-term commercial paper and a 200 billion-yen convertible bonds maturing in September next year.

Mizuho, part of the Mizuho Financial Group, and Mitsubishi UFJ are set to lend about 130 billion yen at the end of August and another 100 billion yen next month and will seek collateral this time, unlike previous loans, media said.

The loans would come on top of the 60 billion yen in stopgap financing they provided to Sharp in July to help the company meet its debt requirements, various media outlets reported.

Shares in Sharp, which has shed more than a third of its value since the beginning of August, jumped 4.4 percent in morning trade, compared with a 0.6 percent slide on Tokyo’s benchmark Nikkei average.

“Sharp is asking two major banks to consider an appropriate amount of loans,” said company spokeswoman Miyuki Nakayama, but declined to identify the banks involved, as well as the amounts being considered.

The news of additional creditor support was first reported by Japanese public broadcaster NHK late on Wednesday.

Sharp, which is grappling with its first restructuring in six decades, is also considering cutting a further 3,000 jobs on top of the 5,000 it has already announced by selling two TV assembly plants to Taiwanese partner Hon Hai Precision Industry , a source familiar with the discussion told Reuters.

Sources at the company’s lenders have said Sharp will submit an asset appraisal report to its banks next month that will identify businesses it has to sell in return for funding.

The loan amount would also depend on how much investment Sharp secures from Hon Hai, the world’s leading contract electronics manufacturer, which previously agreed to buy about a 10 percent stake at 550 yen per share.

As Sharp’s condition has weakened -- its shares last traded at 188 yen -- Hon Hai has moved to renegotiate the March deal under which it would have invested US$844 million.

The Japanese company’s revised restructuring plan was not likely to be finalised until September, bankers involved in the process have said.