Sharp Corp. and Hon Hai Precision Industry Co. are in the final stages of talks on signing an agreement Thursday to rescue the struggling electronics maker, informed sources said.
Sharp’s board plans to meet Wednesday to accept a cut of some ¥100 billion in the capital injection proposed by Taiwan’s Hon Hai, better known as Foxconn Technology Group, from the initially planned ¥489 billion, the sources said Friday.
The reduction comes in light of Sharp’s worsening financial performance for the year ending Thursday and the revelation of the Japanese company’s contingent liabilities, which may become losses in the future.
Hon Hai plans to acquire a stake of 66 percent in Sharp in terms of voting rights. The deal, if concluded, will mark the first foreign acquisition of a major Japanese electronics maker.
Hon Hai is expected to provide a ¥100 billion deposit to Sharp before the takeover.
Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, main creditor banks for Sharp, plan to set up a new credit line of about ¥300 billion to support Sharp’s finances.
Hon Hai is set to buy ¥100 billion in preferred shares in Sharp held by the banks.
On Feb. 25, Sharp accepted Hon Hai’s offer. But Hon Hai put off the signing of a deal to scrutinize a list of contingent liabilities totaling ¥350 billion Sharp presented the previous day.