[Anonymous]

Sharp Corp In Dire Need Of help Puts Copier Div. At Risk
Sharp Considers Selling TV Factories in China, Mexico
As Sharp Corp awaits a lifeline from banks and a Taiwanese investor, the cash-strapped Japanese electronics manufacturer is considering shedding more assets and employees than previously announced.
Heard on the Street

Sharp Rescue Needs Precision
Meanwhile, tension is rising in a staff already rocked by the company’s first layoffs in more than six decades.

Sharp’s slide has been as swift and surprising as the company’s centurylong rise from making "ever-sharp" mechanical pencils was careful and measured.

Underlining the crisis facing one of Japan’s oldest technology companies, Sharp President Takashi Okuda on Monday sent a rare companywide memo to employees saying, "I would like to urge you all to remain calm and not be mislead by various speculations." He also apologized for the "high anxiety" caused by heavy media coverage of Sharp’s restructuring.

With the company’s offices closed for the summer holiday last week, Sharp was in the news daily with reports about possible plans to sell businesses or its flagship Japanese factories. Although Sharp denied those reports, the coverage confused and worried employees not accustomed to seeing their company associated with such drastic measures. Sharp on Friday said it is considering selling some its assets, such as holdings in other companies and an office building in Tokyo.

On Tuesday, a person familiar with the situation said Sharp also is considering the sale of television assembly plants in Mexico and China, which would reduce its payroll by 3,000 jobs. Added to the 5,000 positions already earmarked for elimination under a restructuring plan unveiled earlier this month, Sharp’s current payroll would be cut by 14%.

Sharp’s options include selling the TV plants to Taiwanese partner Hon Hai Precision Industry Co. 2317.TW +1.30% or to Sharp Display Products Corp., a joint venture between Sharp and Hon Hai Chairman Terry Gou, the person said.

The additional staff reductions under consideration would be the latest shock to the Osaka-based company. Until recently, Sharp was the quintessential Japanese electronics manufacturer. As other electronics companies slashed tens of thousands of jobs, Sharp hadn’t had any substantial layoffs since 1950, standing by a pledge of offering lifetime employment.

And while domestic rivals such as Sony Corp. and Panasonic Corp. moved jobs abroad—saying the strong yen and high labor costs made it difficult to produce goods in Japan profitably—Sharp built factories at home and was profitable doing so, recording consecutive years of record earnings until four years ago.

Sharp faces two hurdles in the next few months as it looks to ease the burden of ¥1.25 trillion ($15.74 billion) in debt, including ¥360 billion in short-term commercial paper and a ¥200 billion convertible bond due next year. At the end of June, Sharp’s cash, accounts receivable, inventory and other assets couldn’t cover its short-term liabilities.

The need to raise cash comes as Sharp is taking additional restructuring steps to stem losses at its main liquid-crystal-display and TV-set operations. The company this month forecast a net loss of ¥250 billion for the fiscal year through March, much deeper than the ¥30 billion loss it had previously predicted.

Sharp next month is expected to meet with its two main creditors—Mizuho Corporate Bank Ltd. and Bank of Tokyo Mitsubishi UFJ—to discuss possible additional loans. Borrowing more from the banks undoubtedly would come with tough conditions. Each bank has more than ¥110 billion in outstanding loans to Sharp, and the two lenders plan to extend a total of ¥65 billion yen by the end of this month as a bridge loan.

Complicating Sharp’s efforts to persuade the banks to extend more credit are growing uncertainties over the Japanese company’s alliance with Hon Hai, which is better known as Foxconn.

Hon Hai in March agreed to pay ¥66.9 billion for a 9.9% stake in Sharp. The agreement called for the Taiwanese manufacturer to pay ¥550 a share, but Sharp’s stock has declined to one-third that price, in part because of the deeper-than-expected projected loss. Sharp’s stock closed Tuesday at ¥179, up ¥5 in Tokyo.

Hon Hai said this month that in light of the stock drop, the Taiwanese company no longer is obligated to complete the March investment at the original terms. Sharp insisted that the original deal remained in place but has said that the two companies are discussing how to make their alliance more effective.

As part of their broader partnership, Hon Hai’s Mr. Gou bought half of Sharp’s stake in Sharp Display Products, which operates a plant in western Japan that is the Japanese company’s most advanced LCD-panel factory.

http://www.reuters.com/article/2012/08/21/us-sharp-restructuring-jobs-idUSBRE87K00620120821
Sharp may add 3,000 workers to planned job cuts: source
Embattled Japanese TV maker Sharp Corp  may cut a further 3,000 jobs on top of the 5,000 already announced by selling two television assembly plants to Taiwanese partner Hon Hai Precision Industry, according to a source familiar with the discussion.

Sharp will sell TV factories in China and Mexico to Hon Hai, the source said, confirming an earlier report in Japan’s Yomiuri newspaper. Each employs 1,500 workers, added the source, who was speaking on the condition he was not identified.

The sale of assembly plants is the latest in a string of additional steps the troubled TV maker is mulling to curb costs and satisfy bankers it needs to stay solvent.

Kyodo News reported over the weekend that Sharp was considering doubling the number of job cuts to 10,000 from the 5,000, or 10 percent of its workforce, already planned.

"We continue work towards forming the best alliance within our agreement with Hon Hai, but no decision has been made about selling them our factories in Mexico and China," a Sharp spokesman said.

The maker of Aquos TVs also operates assembly plants in Malaysia, Poland and Japan.

Sharp, with debt of 1.25 trillion yen ($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.

The company will submit an asset appraisal report to its banks next month that will identify businesses the century-old company has to sell in return for funding, sources at the company’s lenders have told Reuters.

Mizuho Financial Group (8411.T) and Mitsubishi UFJ Financial Group (8306.T) will provide several tens of billions of yen in stop-gap financing until the report, being compiled by two consultants, including PricewaterhouseCoopers PWC.UL, is ready, the sources said on condition they were not identified.

The amount of funding needed will also depend on how much investment Sharp secures from Taiwanese partner Hon Hai.

Sharp’s revised restructuring was not likely to be decided until September, bankers involved in the process have said.

http://in.reuters.com/article/2012/08/17/sharp-honhai-idINL4E8JG3TE20120817
Sharp jumps on revamp plan reports
 Hon Hai seeks to double planned Sharp investment – Nikkei
* Sharp looking at sale of copier, airco units – Nikkei

* Sharp seeking 50 bln yen capital increase – Jiji

* Sharp shares jump as much as 13 pct, close up 5.1 pct

TOKYO, Aug 2012 – Shares of Sharp Corp jumped by as much as 13 percent on Friday on reports the struggling Japanese electronics maker was looking at various restructuring avenues to gain favour with its creditors for a capital boost.

Analysts have said Sharp, which has lost nearly $7 billion in market value since the start of January, has many profitable business parts it could sell for a sweeping revamp needed as a prerequisite for new loans from its creditors.

But senior bankers on Friday said there have been no indications of plans mentioned in local media being considered by the TV and display maker’s leading banks. Sharp’s two main lenders, units of Mizuho Financial Group and Mitsubishi UFJ Financial Group, are poring over the company’s restructuring plan to determine how much it needs to survive as it also renegotiates terms of an investment by Taiwan’s Hon Hai Precision Industry.

The Nikkei business daily said on Friday that Hon Hai was looking to double its stake in Sharp to about 20 percent from a 9.9 percent agreed in March, and wants to pay about 200 yen per share, compared with the 550 yen initially agreed.

The Nikkei had earlier reported that Sharp was considering selling its copier, air-conditioner and LED businesses, with Kyocera Corp, Daiwa House Industry Co and Daikin Industries Ltd among possible buyers or investors.

Sharp denied both reports, while a Hon Hai spokesman declined to comment.

Separately, the Jiji News Agency reported that Osaka-based Sharp was seeking a 50 billion yen ($630 million) capital increase, and is approaching U.S. investment funds, Kyocera, Toshiba Corp, and others.

"It is true we are considering various matters for the recovery of our performance, and we will swiftly announce them if we make any decisions that need to be disclosed," Sharp said in one of its statements on Friday.

The reports drove up Sharp shares by as much as 13 percent, before closing up 5.1 percent at 184 yen.

Sharp, which makes screens for Apple Inc’s iPad and iPhone, needs to refinance as much as 360 billion yen ($4.54 billion) of short-term commercial paper and will need a further 200 billion yen in September next year to cover a maturing convertible bond.

With debt totalling 1.25 trillion yen, anything outside of its core liquid crystal display (LCD) panel business could be put up for sale as Sharp looks for ways to raise cash and convince its lenders it’s a viable business.

The last major fabricator of TV panels faces shrinking demand for its sets and lower than anticipated income for smaller LCD screens used in tablet PCs. Sharp and local rivals Sony Corp and Panasonic Corp expect to sell around 10 million fewer TV sets this business year than in the previous 12 months as nimbler competitors such as Samsung Electronics gain market share.

Local media have reported Sharp was asking for more than 100 billion yen for its solar panel plant in Sakai, western Japan, as part of an asset sale, and a company source told Reuters that the maker of Aquos TVs may also sell its buildings in Tokyo as well as TV assembly plants in Poland, Malaysia, and Mexico.

Sharp, named after a mechanical pencil invented by its founder, is also considering spinning off its Kameyama plant, which makes LCD screens, media reported on Friday.

Sharp also holds marketable securities in medical equipment maker Olympus Corp, flash memory chip maker Toshiba, audio-visual equipment maker Pioneer Corp and unlisted Eliiy Power Co, a lithium-ion battery joint venture

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August 21, 2012 at 8:32 AM