Sat, Jan 19, 2013 - Page 15 News List

Sony to sell Madison Avenue US headquarters building

AFP, TOKYO

Sony’s US headquarters building on Madison Avenue in New York is pictured yesterday.

Photo: AFP

Sony shares jumped 12.2 percent yesterday after the embattled Japanese consumer electronics giant said it was selling its US headquarters in Manhattan for US$1.1 billion as part of a huge restructuring.

The Tokyo-listed shares finished at ¥1,149, boosted by a weak yen and after the announcement that New York-based commercial property firm Chetrit Group was leading a consortium that agreed to buy the Madison Avenue skyscraper.

The sale, expected to close in March, comes as the firm undergoes a corporate overhaul aimed at returning to profitability after four years in the red.

In June, the company’s hard times saw its stock value tumble below ¥1,000 a share for the first time since the era of the Walkman.

“Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth,” it said in a statement announcing the sale.

The company was “balancing cash inflows and outflows while working to improve its cash flow by carefully selecting investments, selling assets and strengthening control of working capital such as inventory,” it said. “This sale is made as a part of such initiatives.”

The deal would net Sony about US$770 million after paying off building-related debt and transaction costs, it said, adding that businesses, including its movie and music divisions, would remain in the tower for up to three years under a lease agreement with the buyer.

The 37-storey building, home to about 1,500 employees and on one of New York City’s best-known thoroughfares, opened in 1984 and was sold to Sony in 2002.

Sony was “re-evaluating” its outlook — which forecast a ¥20 billion (US$223 million) annual net profit in the fiscal year ended March — “to take into account this sale and other factors.”

The sale comes after Japanese media reported that the firm was also planning to sell one of its main buildings, in Tokyo’s Osaki District, which accommodates Sony’s struggling television division.

Toshiyuki Kanayama, market analyst at Monex, said the sale was an “obvious plus for Sony’s balance sheet, but does not instantly improve its creditworthiness or investability in the eyes of investors.”

The maker of PlayStation game consoles and Bravia televisions lost ¥456.66 billion in its last fiscal year, with its massive restructuring, including selling off its chemical division while investing ¥50 billion in camera and medical equipment maker Olympus.

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