Japanese electronics maker Sharp has come upon some hard times, and it has mortgaged “almost all” of its factories in its home country to get a $1.92 billion (150 billion yen) line of credit while it waits for a deal with Foxconn parent Hon Hai to come through, Reuters reports.
Company spokesperson Miyuki Nakayama revealed that “almost all the business sites owned by Sharp in Japan” had been put up as collateral for the loan from Muzho Financial Group and Mitsubishi UFJ Financial Group.
Sharp has 11 factories in the country, including the Kameyama plant that produces displays for Apple’s iPhone. It also operates a headquarters in Osaka and office buildings in Tokyo.
The company reportedly owes almost $16 billion (1.25 trillion yen) with hundreds of billions of yen in loans that it needs to pay. It is reportedly looking to sell off over $1 billion in assets to slim down and keep creditors away.
Poor quarterly results and job cuts have resulted in investor uncertainty about Sharp’s prospects and sent the company’s stock into a nosedive. The drop in value further destabilized the company as it jeopardized an agreement that Sharp had reached with Hon Hai to sell 9.9 percent of the company to the manufacturer. Taiwanese authorities have criticized the deal as being “a little pricey” now that Sharp’s stock has declined.
Sharp and Hon Hai announced plans to team up back in March, with Hon Hai agreeing to pay more than $800 million for the minority stake in Sharp. Hon Hai CEO Terry Gou was in Japan last week and had hoped to reach an agreement, but the finalized deal never materialized. Sharp’s president is now believed to be planning to visit Taiwan to court the company.
Though Sharp has offered to fix the agreement at a lower rate, reports suggest that Gou is now vying for a management position within the company as part of the deal.
After leading the global display industry for years, Japanese makers have faced increasing pressure from Korean and Taiwanese competitors. Sony, Hitachi and Toshiba have sought to stem the tide by teaming up to create a Japan Display.
Samsung has been shaking up the display industry on its own. In April, the company spun off its LCD business to form Samsung Display. The newly formed company’s size was enough to make it the world’s biggest display manufacturer.