Sharp Said to Consider New Loans, Equity Options for Funding 

Sharp Corp. is considering a range of financing options, including the sale of new shares to business partners and additional bank loans, in an effort to restructure its debt, according to people familiar with the matter.

The options also include a debt-for-equity swap, the people said, asking not to be identified because the discussions are private. Sharp President Kozo Takahashi is meeting with lenders Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. on Thursday, one of the people said.

Sharp, a supplier of displays to Apple Inc., said this week it is considering “drastic reform” as it prepares a medium-term management plan for release in May. Sharp is forecasting a 30 billion-yen ($251 million) loss in the 12 months ending March as its Aquos TVs struggle to compete against Samsung Electronics Co., Sony Corp. and Chinese makers.

“Sharp’s core business is as bad as it could get,” said Atul Goyal, a senior analyst at Jefferies Group LLC in Singapore. “The company should not be alive. They can’t invest, they can’t fight.”

Shares of Sharp fell 5.3 percent, the most since Jan. 19, to 232 yen in Tokyo, widening their decline to 13 percent this year. The benchmark Topix index has risen 7.8 percent.

Credit Downgrade

Japan’s Rating and Investment Information downgraded the consumer-electronics maker to B- from B+, saying, “Hurdles to Sharp Corp.’s restructuring are becoming even higher.”

The potential debt-for-equity swap was reported March 3 by Nikkei, which didn’t say where it got the information. The newspaper also reported that Sharp’s fiscal 2015 net loss may reach 100 billion yen, and the company may shut its Mihara chip plant and exit its solar business.

Miyuki Nakayama, a spokeswoman for Sharp, said no decisions have been made as the Osaka, Japan-based company considers the restructuring plan, and she rejected the Nikkei report on the chip factory and solar business.

Standard & Poor’s cut its credit rating on Sharp to CCC+ with a negative outlook late Tuesday, citing the increasing chance of a debt-equity swap that it would view as a selective default.

The company’s credit-default swaps rose 175 basis points to 851, the most since April 2013 and Japan’s highest, CMA data show. The yield premium on Sharp’s 2019 bonds reached 531 basis points, the most in more than a year.

Source: Bloomberg – Sharp Said to Consider New Loans, Equity Options for Funding

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