The Yomiuri Shimbun
Sharp Corp., which is undergoing fiscal restructuring, has entered the final stage of negotiations with Innovation Network Corporation of Japan (INCJ), a government-sponsored fund that proposes to inject about ¥300 billion of capital into the company, it was learned Wednesday.
Under the INCJs plan, Sharps liquid-crystal display (LCD) product division, which has been operating in the red, will be spun off from the company and integrated with Japan Display Inc. (JDI), in which INCJ is a large stakeholder.
Sharp and INCJ aim to reach a final agreement on the restructuring plan by the end of this fiscal year.
Taiwans Hon Hai Precision Industry Co. had presented Sharp with a rescue plan that included up to ¥700 billion in capital injection. INCJ, which had previously offered Sharp ¥200 billion, raised the amount to counter Hon Hais proposal.
Under the renewed restructuring plan, INCJ will take a majority of shares in Sharp and seize the management initiative. INCJ will also extend loans to JDI so that the company will be able to quickly purchase Sharps LCD businesses.
In addition to the capital injection into Sharp, the loans to JDI for purchasing Sharps LCD division will be a pillar of INCJs restructuring plan.
INCJ will also ask Sharps main banks Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ to effectively waive the loans they have extended to the company.
The two banks have converted their loan claims, which amount to ¥200 billion, into preferred stock. They will next dispose of the valueless preferred stock, swallowing the losses.
INCJ will also call for the resignation of Sharps executive managers. On Jan. 29 INCJ will hold a meeting of its internal committee on the issue, as well as on the details of the renewed plan to swiftly conclude negotiations with the banks.
The banks have demanded that Sharps LCD division be merged with JDI as soon as possible.
That INCJ stepped in and proposed extending loans for the purchase of the LCD division is the likely reason behind officials of the two banks taking a positive stance on the plan.
The Economy, Trade and Industry Ministry, which supervises INCJ, is concerned that if Sharp is purchased by Hon Hai, Japanese technologies may flow overseas.
The ministry has also judged that if Hon Hai enlarged its business scale, the management of JDI, which is a rival of Hon Hai, would be negatively impacted.
INCJ will likely realign Sharps home electronics and appliance businesses with those of other manufacturers by seizing the management initiative at Sharps corporate office.
INCJ sees it as more advantageous for Japanese industries future growth to use Sharps rehabilitation to realign the whole of Japans home electronics and appliance industry
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