OSAKA - Sharp reached a broad agreement Thursday with two major lenders to receive 200 billion yen ($1.66 billion) in support through a debt-equity swap, which will shore up the company's finances as it embarks on drastic, costly reforms.
Sharp President Kozo Takahashi met Thursday with officers from Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ to make a fresh appeal for help. He outlined restructuring plans that included an early retirement programme for domestic employees and the sale of Sharp's headquarters in Osaka. The company also will consider selling off liquid crystal display TV assembly plants in not only Mexico - a possibility that had arisen earlier -- but Malaysia and China as well.
The prospect of support from key lenders will let the troubled electronics maker start restructuring in earnest.
A debt-equity swap involves exchanging some debt, such as loans from financial institutions, for stock or other forms of equity. This reduces a company's liabilities and makes it easier to repay debt. Sharp has borrowed more than 600 billion yen from the two banks, 200 billion of which will be converted to preferred shares.
The banks are expected to formalize the decision to buy into Sharp this month. The electronics maker also plans to issue 25 billion yen in preferred stock to Japan Industrial Solutions, a corporate turnaround fund that counts megabanks among its stakeholders.