Sharp looks to private equity funds for lifeline

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Sharp looks to private equity funds for lifeline

Sharp, the Japanese electronics maker forecasting a record loss, is considering seeking investments from private equity funds to replenish dwindling cash levels, two people familiar with the matter said.

The company is also considering selling shares to the public as an option, the people said, asking not to be identified as the discussions are private. Details of the funding could be included in Sharp’s mid-term plan, which may be released in May, they said.

Sharp’s cash tumbled to 164 billion yen ($1.7 billion) as of Dec. 31, the lowest level based on records stretching back to 1992, amid slumping earnings. The Osaka-based company, bracing for 200 billion yen of convertible bonds maturing this year, is seeking to raise funds by agreeing to sell stakes to Qualcomm and Samsung Electronics. A deadline for an investment from Foxconn Technology Group expired Wednesday without a deal.

“Sharp is looking at various measures to raise funds,” spokeswoman Miyuki Nakayama said by phone Wednesday, declining to elaborate.

Sharp is also trying to develop business alliances and include them in its next business plan to revive earnings, one of the people said.

In September, Sharp signed an agreement with Japanese banks for a 360 billion yen loan. The company secured 30 billion yen in funds from three banks this month, three people familiar with the matter said March 14.

Five straight quarters of losses eroded Sharp’s equity to 10 percent of its assets by the end of 2012, compared with 30 percent a year earlier. Japanese manufacturers including Olympus and Mazda Motor sold new shares last year after their so-called equity ratio fell below 20 percent to protect their credit ratings.

In December, Sharp said Qualcomm, the biggest maker of mobile-phone chips, would pay as much as 9.9 billion yen for a stake and would cooperate on display technology.

Samsung, the world’s biggest smartphone maker, said March 6 it would spend 10.4 billion yen buying Sharp stock to secure a supply of liquid-crystal displays. Bloomberg
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