Banks hammer out refinancing deal for embattled Sharp Corp. before Hon Hai deal, say sources

“Banks are hammering out a refinancing plan for embattled Sharp Corp. without waiting for Hon Hai Precision Industry Co Ltd. to lend a helping hand through a stalled equity investment, sources at the lenders said,” Nobuhiro Kubo and Taiga Uranaka report for Reuters. “Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. are aiming to arrange financing of as much as 300 billion yen ($3.8 billion) for Sharp by as early as September 20 in return for cost-cutting pledges and asset sales, two sources told Reuters on condition they were not identified. The plan, which will not cover a 200 billion-yen convertible bond that matures in September next year, will go ahead with or without capital injection from Hon Hai, they said.”

Kubo and Uranaka report, “For Sharp managers, the best agreement with Hon Hai is a ‘partnership with no operations control,’ said Jeff Loff, an analyst at Macquarie Capital Securities in Tokyo. In addition to fixing its loss-making TV unit, Loff said, Sharp will have to raise the profitability of its small LCD panel business, which fabricates displays for smartphones and tablet PCs, including the latest iPhone that Apple is expected to unveil on September 12… Sharp said on Thursday that it had mortgaged nearly all of its domestic offices and factories, including one which makes screens for Apple Inc’s iPhones in order to quickly secure fresh loans of up to 150 billion yen.”

“Sharp and Hon Hai had been expected to conclude an agreement for the Taiwanese company to buy a 9.9 percent stake in the maker of Aquos TVs at the end of a trip by Hon Hai chairman, Terry Gou, to Japan a week ago. His abrupt return to Taiwan a day early scuttled that plan, leaving disappointed Sharp executives trying to arrange a meeting with Gou in Taipei,” Kubo and Uranaka report. “Gou, who already jointly owns a TV display plant in Japan with Sharp, has since said he wants a say in Sharp’s management in return for Hon Hai’s cash… ‘Terry Gou’s strategy is to ally with Japanese companies against Korean ones. It needs Sharp to achieve that goal,’ said Alex Hu, the head of propriety trading of Mega Securities Co Ltd, which owns Hon Hai shares.”

Read more in the full article here.

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    1. Do you mean the cash-management operation that Apple has based in Nevada?

      Well, if you are wondering about Apple’s Braeburn owning any of these suppliers, that’s probably not the case, given that they are all overseas, and it would make far more sense to use Apple’s foreign-based cash, rather than its domestic-based cash in Braeburn.

  1. I can’t help but imagine Apple floating their orders away from Samsung over to Sharp. Obviously, that’s not a simple task. But revitalizing Sharp is certainly a better prospect for all concerned than feeding the beast ShameScam any further cash.

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