Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on T Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on Twitter, Angel List, LinkedIn.
Japanese tech firm Sharp has confirmed that it has close an agreement for a key $4.6 billion financing deal to help bail it out of the serious financial issues that are plaguing the 100-year-old company.
A note on Sharp’s investor site details the “working capital loan” which will see Mizuho Corporate Bank and Bank of Toyota-Mitsubishi UFJ lend the struggling company 180 billion yen, as part of a contract that ends 30 June 2013 and includes an equal sum in credit.
The much needed financial move — which has been strongly rumored this week — is seen as a major step for the firm, which produces parts for Apple’s iPhone 5 among other things. Yesterday Reuters explained that the deal is “clearing a major obstacle to firm’s survival”.
Sharp is still continuing to negotiate an investment deal with Hon Hai which would see the Foxconn parent take a 9.9 percent stake. Talks were tipped to close four weeks ago but, with discussions still ongoing, the deal appears increasingly uncertain – although the financial boost is likely to give Sharp greater leverage.
While waiting on Hon Hai, Sharp has mortgaged almost all of its Japanese factories to generate $1.92 billion (150 billion yen) of credit.
This year has not been a good one for Sharp, to say the least. The firm has already trimmed 5,000 jobs and, just last week, plans to lay-off 11,000 staff and generate $2.74 billion from asset sales were leaked to a Japanese news outlet.
Those plans involve the restructuring of firm’s LCD TV business, strengthening its LCD panel business for smartphones, and cutting down its solar battery operations.
By selling its assets, Sharp believes it will be able to generate 213.1 billion yen ($2.74 billion) by March 2013, and it is aiming to integrate its four domestic sales businesses no more than a month later.
At the end of August, Sharp announced that it had set aside close to $350 million (27 billion yen) to offer its staff voluntary redundancy packages. Employees looking to leave the company early were given an application deadline of between November 1-14, estimating that 2,000 employees will be given the redundancy terms.
The retirement date was set for December 15, but it isn’t known if the company will adapt those plans following the restructuring proposals and the confirmation of its loan.
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