Hon Hai Precision Industry Co (鴻海精密) has reached a basic agreement with Sharp Corp’s banks over a ￥300 billion (US$2.69 billion) line of credit, according to the Yomiuri Shimbun, potentially clearing a hurdle toward a takeover of the Japanese electronics maker.
Under the agreement, Sharp would be able to borrow from its main banks, Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc, if it suffers losses from potential liabilities or needs new investments, the Japanese daily said, without giving the source of the information.
The banks are also considering waiting for about one month on Sharp’s repayment of about ￥510 billion in loans due at the end of this month if talks with Hon Hai, known as Foxconn Technology Group (富士康) outside Taiwan, are prolonged, according to the newspaper.
Sharp spokesman Yoshifumi Seki declined to comment, while telephone calls to Mizuho and Mitsubishi UFJ yesterday went unanswered.
Foxconn spokesman Louis Woo (胡國輝) said in an e-mail that “there is no update from our side.”
The credit line would move forward a more than ￥600 billion takeover that has been stalled almost since Sharp’s board agreed to it last month.
Sharp has been losing money for years and its need for financial support set off the takeover battle between Foxconn and Innovation Network Corp of Japan, a government-backed investment fund.
The company’s cash totaled ￥208.5 billion at the end of last year, according to data compiled by Bloomberg.
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