Electronics giant Sharp on a knife-edge with banks
Loss-making Japanese electronics giant Sharp met its main banks yesterday in an effort to secure its second major bailout since 2012, betting they will have little choice but to pay up despite their call for more drastic overhauls.
Sharp chief executive Kozo Takahashi was due to meet officials from Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, hoping to discuss further funding and buy time, people with direct knowledge of the matter said.
Sharp may consider an exit from solar panels and plant closures, but these would not be enough for the banks, which want Sharp to follow the more successful Panasonic Corp and Sony Corp with bolder moves, the sources said.
"There is no next time," said a senior executive at one of the banks. "I am giving instructions to our people that Sharp needs to make an unprecedented, bold plan."
But while the banks are loath to throw good money after bad, they are keen to avoid triggering a collapse of the globally known, 100-year-old maker of TVs and high-end panel displays.
The banks agreed in September 2012 to save Sharp with loans and credit lines worth Yen360bn (42.7bn) at today's exchange rates, in exchange for promises to return to the black by this year. Sharp exited the European TV market and closed solar-panel businesses in Europe and the United States.
The banks have had representatives on Sharp's board since the last bailout, so cannot claim to have been misled about its finances. The firm recently reversed a profit forecast for the year ending this month to a Yen30bn loss, blaming weak sales of displays for smartphones and tablet computers.
Banks say a debt-for-equity swap - writing off their loans in return for ownership of Sharp - would be a logical option for any new rescue, one source said.
Japanese media put a new bailout at up to Yen200bn on Tuesday, but bankers insist no amounts have been discussed and that any funding would be determined only after deciding what is needed to help Sharp take specific restructuring steps.
A Mizuho spokeswoman said nothing had been decided, with Sharp and the banks due to begin talks ahead of the company's expected release of its medium-term business plan in May.
Sharp and MUFG representatives declined comment.
Troubles at Osaka-based Sharp underline a decline in competitiveness for Japanese consumer tech firms, which have lost market share to the likes of Apple and Samsung Electronics, as well as more nimble Asian rivals.
Sharp gets most of its sales from LCD panels, TVs and mobile phones. It could consider such steps as exiting the solar energy business and shutting some plants, company sources said.
But executives are so far unwilling to take more radical options such as merging the display business with that of rival Japan Display Inc, or cutting more jobs, the company sources added.