Sharp looking to raise $1.7bn to secure finances

Sharp is reportedly planning to raise as much as $1.7 billion [£1.07 billion] through a share issue to strengthen its perilous financial situation.

Reuters report sources have told them the Japanese firm is seeking to pay down debt following a rescue last year and “shore up its tattered finances” with a capital injection that would keep it going until the end of the financial year in March.

The sources stated that Sharp intends to garner up to 150 billion yen [£954 million] using a public share offering with an additional 20 billion [£127 million] yen being raised through a third-party share allocation.

All this is before you consider that Sharp’s corporate pension plan will have total unfunded liabilities of 120 billion [£763 million] yen by the close of the current financial year, though it doesn’t need to be funded immediately so can take a back seat for the time being.

Sharp will make a decision early next week on the best way to raise the capital with the above share issue plan looking like the most likely course of action for the struggling electronics company.

Markets didn’t react well to the news Sharp is looking at raising more capital with the company share price dropping by six per cent to 363 yen [£2.30] – the lowest it has stooped in two and a half months.

Sharp supplies display panels to many of the world’s largest electronics manufacturers including Apple and Samsung, with investors fearful of whether Sharp will remain a realistic option alongside affordable alternatives made in China.

Samsung invested some 10.4 billion yen [£74 million] to help the ailing electronics supplier earlier this year and in return received a three per cent stake in Sharp. The cash injection gave Samsung better access to Sharp’s LCD supply for its smartphones and televisions, especially 32in models. As a result of the transaction Samsung became the largest individual stakeholder in Sharp that isn’t a financial institution.

Image Credit: Flickr (Venture Beat)