Bloomberg News

Japan Lenders Bailing Out Sharp May Increase Oversight

October 14, 2012

Japan Banks Bailing Out Sharp May Increase Management Oversight

The maker of Aquos TVs secured 360 billion yen ($4.6 billion) of funding from Mizuho and Bank of Tokyo Mitsubishi-UFJ, it said Sept. 28, after submitting cost-cutting proposals to the banks earlier. Photographer: Tomohiro Ohsumi/Bloomberg

Banks bailing out money-losing Sharp Corp. (6753) to the tune of $4.6 billion may increase their management oversight of the Japanese television maker to support its return to profit.

Mizuho Corporate Bank Ltd. and Bank of Tokyo-Mitsubishi UFJ Ltd. plan to send executives to Sharp, the Asahi newspaper reported yesterday. The lenders, based in Tokyo, are selecting the executives and plan to discuss the matter with the company, the newspaper reported, without saying how it obtained the information.

The maker of Aquos TVs secured 360 billion yen ($4.6 billion) of funding from Mizuho and Bank of Tokyo Mitsubishi- UFJ, it said Sept. 28, after submitting cost-cutting proposals to the banks earlier. Sharp has also been renegotiating a proposed stake sale to Taipei-based Foxconn Technology Group after widening its full-year loss forecast eightfold in August, triggering a slide in its share price. The talks may continue until March, Sharp said last month.

Miyuki Nakayama, a spokeswoman for Sharp, wasn’t immediately able to comment on the Asahi report.

Calls to Bank of Tokyo-Mitsubishi UFJ’s press officials and spokesman Shinya Matsumoto’s mobile phone were unanswered. A phone call to Mizuho Financial Group Inc. (8411) spokesman Masako Shiono’s office wasn’t answered.

The Asahi report didn’t say how many executives may be sent to Sharp or what posts they may take.

Sliding Shares

Sharp rose 4.8 percent to 153 yen at the close of Tokyo trading Oct. 12. The stock dropped 4.6 percent the previous day to 146 yen, the lowest level since November 1971, according to Nakayama, the company spokeswoman. The shares have slid 77 percent this year, the worst performer on Japan’s benchmark Nikkei 225 (NKY) Stock Average.

Sharp will get a 180 billion yen loan from Bank of Tokyo- Mitsubishi UFJ, a unit of Japan’s largest banking group by market value, and Mizuho Corporate, a unit of the No. 3 group, the company said Sept. 28. Another 180 billion yen in the form of a revolving credit facility due in June will also be extended to Japan’s biggest maker of liquid-crystal displays.

The TV maker may consider raising new funds, because it needs money for growth and to regain the trust of the market, a senior executive at the company said in Osaka, Japan, on Oct. 12. The executive declined to be identified, citing company policy.

The electronics company presented a revival package to its main banks that included cutting more than 10,000 jobs, or 18 percent of its workforce, and selling overseas plants as well as U.S. solar developer Recurrent Energy LLC, people with knowledge of the proposal said Sept. 26.

Sharp on Aug. 2 forecast a loss of 250 billion yen for the 12 months ending March 31.

Foxconn, led by billionaire Terry Gou, agreed in March to invest 67 billion yen for a 9.9 percent stake in Sharp at 550 yen a share. Under the agreement, the transaction was to be completed by March 2013. Sharp turned to Foxconn, whose Hon Hai Precision Industry Co. unit makes Apple Inc. iPads, in an attempt to restructure its money-losing LCD business.

To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net


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