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Sharp holds last-minute talks on Hon Hai’s bailout proposal

JIJI

Sharp Corp. held a last-minute meeting over the weekend to discuss the rescue proposal from Taiwan’s Hon Hai Precision Industry Co., updating its outside board members on the negotiations.

If there is broad support for the proposal by Hon Hai, also known as Foxconn, Osaka-based Sharp will formally select the electronics manufacturer to head its restructuring at an extraordinary board meeting Thursday, informed sources said. The contract will then be concluded later this month.

On Saturday, Sharp’s executive officers and its board of directors separately discussed the two bailout proposals, which include one from the state-backed Innovation Network Corp. of Japan.

The Taiwanese company plans to spend about ¥700 billion to take effective control of Sharp and reconstruct its business without selling off any key segments, including its main jewel, the liquid crystal display business. It also plans to let Sharp keep its young employees on the payroll.

On Monday, senior Sharp officials made a three-day visit to Taiwan to reaffirm Hon Hai’s commitment and reached a broad agreement on the details, including a draft contract. The contingent included Sharp President Kozo Takahashi and Vice President Tetsuo Onishi as well as Chairman Shigeaki Mizushima.

The company is scheduled to hold a regular board meeting Wednesday, but a decision on a rescue proposal is expected to be made at an extraordinary meeting on Thursday, the sources said.

But some of Sharp’s executives favor the INCJ proposal. If that one gains wider support, Sharp will resume full negotiations with the fund until a deadline at the end of March. Hon Hai was given preferred negotiating rights for its proposal earlier on.

The negotiations with INCJ are expected to be difficult because the plan calls for requesting fresh financial aid from Sharp’s frustrated creditors — Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ.

INCJ plans to invest about ¥300 billion in Sharp and spin off its LCD division for integration with Japan Display Inc., the joint venture the state-backed fund organized to amalgamate similar units from Sony, Toshiba, and Hitachi that has become the leading manufacturer of small and midsize LCDs in Japan. INCJ remains Japan Display’s top shareholder.