Sharp to raise $1.1B with new stock offering

Ailing Japanese manufacturer has gotten its creditors' approval to offer stocks to generate 100 billion yen, after initial concerns such a move would dilute the value of existing shares.
Written by Ellyne Phneah, Contributor
Sharp is looking to pay off its 200 billion yen debt by offering new stocks and increasing sales of its LCD panels.

Sharp will raise about 100 billion yen (US$1.07 billion) through a public stock offering to repay part of its 200 billion yen (US$2.14 billion) worth of convertible debt due this September.

Citing unnamed sources, The Japan Times reported Wednesday that the company's main creditor banks--Mizuho Corporate Bank and Bank of Tokyo-Mitsubishi UFJ--have signed off on the stock offer plan amid signs of a recovery in Sharp's performance.

Sharp will also take into account movement of its share price, to decide the timing of its public stock offering, the sources said. The company will announce on May 14 its group earning results for the business year ended March 2013, as well as its medium-term business plan through fiscal year 2015.

As for the remaining 100 billion yen (US$1.07 billion) of debt, Sharp aims to secure it by expanding the sales of liquid crystal display (LCD) panels, the sources added.

According to the report, the two banks initially opposed the plan due to concerns it would undermine the value of stocks held by existing shareholders and urged Sharp to consider other ways of raising capital such as the sale of its business units.

However, the banks have approved the plan and Sharp now projects to return to the black on a group operating basis in the October 2013 to March 2014 period, anticipating an increase in LCD sales after concluding a capital and business tie-up with Samsung.

Sharp also said it will raise 30 billion yen (US$313 million) from various banks to keep itself afloat.

Last month, it was reported the struggling Japanese manufacturer would received the remainder of a US$120 million investment by Qualcomm which was announced originally in June 2012. The investment makes the U.S. chipmaker Sharp's biggest shareholder.

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