Sharp said to be offered cheaper loans in move to save deal with Foxconn
by Taro Fuse and Makiko Yamazaki,
2016-03-09 15:22:57.0
TOKYO — Sharp’s two main lenders are set to lower interest rates on billions of dollars in loans, and offer other financial support, as part of a planned takeover by Taiwan’s Foxconn, a source with direct knowledge of the plan said.
The move is partly a response to a last-minute hitch to the signing of the deal over potential liabilities at the ailing Japanese display maker, although some of the discussions have been going on for a while, the source said.
The deal, which has been estimated to be worth $5.8bn and will mark the largest acquisition of a Japanese technology firm by a foreign company, is now likely to be announced next week, he said.
The core banking units of Mitsubishi UFJ Financial Group and Mizuho Financial Group have extended the vast majority of Sharp’s ¥510bn ($4.5bn) in syndicated loans, which are due at the end of March.
They also plan to extend the deadline and are considering an additional commitment line, the source said. Sharp has a total of ¥700bn in interest-bearing debt.
The sources declined to be identified because the plan had not been officially announced. Representatives for Mitsubishi UFJ and Mizuho declined to comment.
Sharp and Foxconn also declined to comment.
Foxconn, known formally as Hon Hai Precision Industry, pushed the pause button on the deal last month after receiving an unexpected document from Sharp just before the pact was due to be signed.
The document listed contingent liabilities of about ¥300bn, which were worst-case scenario risks that might happen in the future, sources familiar with the matter have said.
The additional support under consideration is designed to ensure a turnaround at Sharp and to address potential risks that were included in Sharp’s document, the first source said.
Clinching the deal would give Foxconn control of Sharp’s advanced screen technology and strengthen its position with major client Apple. A takeover by the world’s biggest contract electronics manufacturer would also vastly expand sales channels for Sharp’s liquid crystal display (LCD) panels.
Sources said finalising the pact had dragged out a little as the two sides were still hammering out some details and also because Sharp was reluctant to make an announcement on Friday, the fifth anniversary of the devastating Fukushima earthquake.
Reuters
A Foxconn factory in Wuhan, China. Picture: REUTERS/YUYA SHINO
TOKYO — Sharp’s two main lenders are set to lower interest rates on billions of dollars in loans, and offer other financial support, as part of a planned takeover by Taiwan’s Foxconn, a source with direct knowledge of the plan said.
The move is partly a response to a last-minute hitch to the signing of the deal over potential liabilities at the ailing Japanese display maker, although some of the discussions have been going on for a while, the source said.
The deal, which has been estimated to be worth $5.8bn and will mark the largest acquisition of a Japanese technology firm by a foreign company, is now likely to be announced next week, he said.
The core banking units of Mitsubishi UFJ Financial Group and Mizuho Financial Group have extended the vast majority of Sharp’s ¥510bn ($4.5bn) in syndicated loans, which are due at the end of March.
They also plan to extend the deadline and are considering an additional commitment line, the source said. Sharp has a total of ¥700bn in interest-bearing debt.
The sources declined to be identified because the plan had not been officially announced. Representatives for Mitsubishi UFJ and Mizuho declined to comment.
Sharp and Foxconn also declined to comment.
Foxconn, known formally as Hon Hai Precision Industry, pushed the pause button on the deal last month after receiving an unexpected document from Sharp just before the pact was due to be signed.
The document listed contingent liabilities of about ¥300bn, which were worst-case scenario risks that might happen in the future, sources familiar with the matter have said.
The additional support under consideration is designed to ensure a turnaround at Sharp and to address potential risks that were included in Sharp’s document, the first source said.
Clinching the deal would give Foxconn control of Sharp’s advanced screen technology and strengthen its position with major client Apple. A takeover by the world’s biggest contract electronics manufacturer would also vastly expand sales channels for Sharp’s liquid crystal display (LCD) panels.
Sources said finalising the pact had dragged out a little as the two sides were still hammering out some details and also because Sharp was reluctant to make an announcement on Friday, the fifth anniversary of the devastating Fukushima earthquake.
Reuters
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