Report: Sharp raising funds to balance books

Japanese electronics company Sharp is mulling over a number of possibilities to raise funds in the short term, including selling overseas factories, in order to ease some of the debt on its books, according to the Wall Street Journal (WSJ).

In a report on Thursday, it cited people familiar with Sharp's discussions with creditors saying the company could sell its factories and securitize future payments from customers to raise funds to redeem the bulk of its 360 billion yen (US$4.6 billion) in commercial paper. This sum is part of the 1.25 trillion yen in interest-bearing debt weighing on the company's books, it added. 

Sharp will then replace the commercial paper with short-term loans from banks including Mitsubishi Financial Group and Mizuho Financial Group, with each committing about 150 billion yen (US$1.9 billion) in loans this month to alleviate the cash flow problem, the sources noted.

The company had also been negotiating with Taiwan's Hon Hai Precision Industry over the latter's intention to buy a 9.9 percent stake in the company. Hon Hai CEO Terry Gou said his company will follow through with the investment, but was seeking revisions in the original terms which would see it pay 550 yen (US$7.00) per share after the Japanese company widened its full-year loss forecast to 250 billion yen (US$3.2 billion).

However, WSJ noted that a Taiwanese regulator, whose approval they need for the deal to go through, said Hon Hai's plans were against the interest of its shareholders but Sharp said talks were still ongoing. One of the sources suggested that should the Taiwanese investment falls through, Sharp could sell the stake to overseas private equity firms that are interested instead.