Sharp may issue bonds, securities to cushion blow from Hon Hai deal

Kyodo

Sharp Corp. might issue preferred securities and subordinated bonds to make up for a drop in Taiwanese partner Hon Hai Precision Industry Co.’s investment in the struggling electronics giant, sources familiar with the matter said.

The Hon Hai group, better known as Foxconn, agreed with Sharp in March to buy a 9.9 percent stake in the company for ¥550 per share. At that price, Sharp was expected to receive around ¥66.9 billion. But the share price later sank after Sharp reported huge losses, and the two are discussing a lower price for the stock.

On Friday, Sharp shares were trading at about ¥200 on the Tokyo Stock Exchange — far below the price initially agreed to by Hon Hai. If Hon Hai were to purchase its stake at these prices, the proceeds would fall short of Sharp’s estimate by about ¥40 billion.

To make up for the difference, Sharp is also thinking of selling Hon Hai some of its overseas factories for liquid crystal display televisions, the sources said.

Subject to sale are believed to be TV plants in Mexico, Poland, China and Malaysia. Sharp expects the plant sales to also reduce overhead costs, they said.

Sharp is moving to issue preferred securities and subordinate bonds to close business partners instead of floating corporate bonds, which would require it to pay a relatively high interest rate because its credit rating was downgraded earlier this year.