Tokyo / Bloomberg
Sharp Corp. is facing a potential cash crunch at the end of this month as talks drag on with Foxconn Technology Group for a rescue deal that would inject billions of dollars in new capital into the struggling Japanese electronics maker.
Sharp has 510 billion yen ($4.5 billion) in credit lines and loans that are set to expire on March 31 and the banks need the company to strike an agreement for a bailout before those loans are renewed, according to people familiar with the matter. The banks, Mizuho Financial Group and Mitsubishi UFJ Financial Group, could finish the renewals by the deadline if Sharp and Foxconn reach final terms next week, said the people, who
couldn’t be identified because the matter is private.
“Sharp can do nothing without getting money,” said Mana Nakazora, chief credit analyst in Tokyo at BNP Paribas SA. “The company would die if nobody helps them, though it is an unlikely scenario that the banks don’t help Sharp.”
Sharp’s need for cash is the backdrop to one of the more bizarre takeovers in Japanese corporate history.
Foxconn fought for months against the government-backed Innovation Network Corp. of Japan in the takeover battle, and last Thursday Sharp’s board voted in favor of the Taiwanese company’s offer. Hours later Foxconn said it would postpone the deal until it sorted through new information it had just received from Sharp.