Sharp asks turnaround fund for help, on top of aid from banks: Nikkei

A shopper wearing a mask rides an escalator past advertisements for Sharp Corp's Aquos television at an electronics shop in Tokyo March 3, 2015.

Credit: /Yuya Shino

- Loss-making Sharp Corp has asked a domestic corporate turnaround fund to invest up to $250 million in capital - aid which would come on top of plans to tap its two main lenders for a second major bailout, the Nikkei business daily reported.

Hit by a supply glut of smartphone screens in China and fierce competition from rival Japan Display Inc that derailed efforts at a recovery, Sharp has warned of its third annual net loss in four years and is working on a fresh plan to overhaul its businesses.

Sharp Chief Executive Kozo Takahashi met with officials from Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ on Thursday, although he did not request specific amounts or make promises about restructuring, sources familiar with their exchange said.

The Nikkei said the embattled electronics manufacturer has also reached out to Japan Industrial Solutions to take a stake worth up to 30 billion yen. The turnaround fund is backed by several financial institutions including Mizuho and Bank of Tokyo-Mitsubishi as well as the state-backed Development Bank of Japan.

The fund would purchase preferred or common shares in Sharp, the Nikkei said, adding that Sharp hopes to receive the investment by March next year.

A spokeswoman for Sharp declined to comment on the report, saying only nothing had been decided and that it was working on restructuring plans that are due to be announced in May. A spokesman for Japan Industrial Solutions declined to comment.

Financial sources have said banks want Sharp to embark on a bold restructuring, similar to recent efforts from Panasonic Corp and Sony Corp which are showing signs of a turnaround.

But they are also expected to avoid pursuing too tough a stance for fear of triggering a collapse of the 100-year-old maker of TVs and high-end panel displays.

Bankers have said a debt-for-equity swap - writing off their loans in return for ownership of Sharp - would be a logical option for any new rescue.

The Nikkei has put the potential value of a debt-for-equity exchange at around 150 billion yen ($1.3 billion) and has also said the company may reach out to other electronics makers such as Samsung Electronics which has a stake of around 2 percent.