Cash-poor Sharp mortgages display factories, including Apple screen plant
Japan's Sharp, one of the world's largest makers of LCD panels and a supplier of displays for Apple products, has taken the rare step of mortgaging its factories and buildings to secure an emergency loan from its main banks, a spokeswoman said Thursday.
The struggling electronics maker, which forecasts it will lose over $3 billion in the current fiscal year, is facing a severe cash crunch as it attempts to finalize turbulent negotiations for a cash injection with Taiwanese electronics giant Hon Hai Precision Industry.
The move comes as media reports say Sharp has been unable to finalize preparation to make screens for Apple's upcoming new iPhone and iPad products, a major source of income.
"Sharp has put its domestic business sites, headquarters and Kameyama plant up for collateral," said Sharp spokeswoman Miyuki Nakayama.
Sharp secured AY=150 billion (US$1.9 billion) in emergency financing from its two main banks, Mizuho and Tokyo-Mitsubishi UFJ, on Aug. 31, she said.
Negotiations with Hon Hai, the parent company of Foxconn Electronics, for funding in exchange for a nearly 10 percent stake in Sharp, have been rocky, with an original deal announced in March canceled after Sharp's stock price plunged. Last week, Hon Hai chairman Terry Gou cut short his trip to Japan and canceled a media appearance, saying in interviews he wanted input in Sharp's business decisions, not just a passive investment.
Sharp has made clear it is eager to complete the deal, which has widely been viewed within Japan as a sign of the country's waning stature in the global electronics industry. The company, which will celebrate its 100-year anniversary next week, bet heavily on large LCD screens in recent years, only to see global TV and panel prices fall while the market for smaller smartphone and tablet screens exploded.
On Wednesday, rating agency Moody's cut the company's credit rating to its speculative or "junk" status, questioning Sharp's ability to meet its short-term funding requirements.
(Source: computerworld.com)
