Friday, September 7, 2012

Japan's Sharp Corp offers headquarters for loans


TOKYO: Cash-strapped electronics giant Sharp Corp said on Thursday it is offering nearly all of its Japanese real estate -- including its Osaka headquarters -- as collateral to win fresh bank loans.

The unusual move comes as Sharp looks to stem massive losses that have pounded its share price and thrown into doubt a deal that would see Taiwan's Hon Hai Precision inject some desperately needed money into the Japanese firm.

The plan to use real estate as collateral for bank financing worth up to 150 billion yen (US$1.9 billion) excludes some properties in Tokyo's suburbs that the firm wants to sell, a Sharp spokeswoman said.

However, it does include the century-old television and smartphone maker's headquarters in western Japan and domestic production factories.

The move underscores an increasingly dire situation for the maker of Aquos brand electronics which is scrambling to repair its dented balance sheet.

Last week, Standard & Poor's cut its credit rating on Sharp to junk status after the firm said it lost about US$1.76 billion in the April-June quarter while warning of a bigger-than-expected full-year loss.

"Sharp's liquidity position has weakened, and the company is highly dependent on short-term borrowings in light of weak internal cash flow and a less favourable funding environment," S&P said in its August 31 statement.

The company's shares dived to a four-decade low last month with investors wiping around US$1.0 billion off its market value in just one day following the release of its dismal financial results.

The shares were down 5.74 per cent to 197 yen in Thursday afternoon trade in Tokyo.

To stem the bleeding, Sharp has announced a huge overhaul that could see it cut about 15 per cent of its 57,000-strong global workforce, its first layoffs since 1950.

The company, which has seen its mainstay television, liquid crystal display and solar panel products struggle, said the job reductions were part of a bid to cut annual fixed costs by 100 billion yen.

Rivals Sony and Panasonic have also been swimming in red ink as Japan's electronics giants struggle to cope with a strong yen, falling prices, heavy labour costs and fierce competition from foreign rivals.

  
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