Hon Hai Precision Industry Co (鴻海精密) is asking to scale back its investment in financially troubled Sharp Corp by ￥100 billion (US$893 million) amid concerns over the Japanese firm’s contingent liabilities and bottom line, Japan’s Jiji Press said yesterday.
The report said that Sharp is scheduled to hold a board meeting later this month to discuss Hon Hai’s request, adding that the Japanese firm has been leaning toward the new proposal by the potential Taiwanese suitor to cut its investment by ￥100 billion from the previously planned ￥489 billion.
Through the investment, Hon Hai aimed to acquire a 65.9 percent stake in Sharp.
The Jiji Press said that Sharp has been anxious to cut a final deal with Hon Hai for a bailout as soon as possible as the ailing Japanese firm is desperate to refinance its massive debit with its major creditors, Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc.
The report said that Hon Hai had previously requested to cut its investment in Sharp by as much as ￥200 billion during their bilateral talks in Taiwan earlier this month, and backed off from its earlier promise to place a ￥100 billion deposit as a guarantee to ensure the deal would go through.
However, the two major banks are vexed by the proposed ￥200 billion cut in investment as the deep cut would make Hon Hai’s offer even lower than ￥300 billion proposed by INCJ, the report said.
Therefore, the report said that Hon Hai has decided to lower its investment by ￥100 billion and keep its promise to place a ￥100 billion deposit to guarantee the deal.
In addition, Hon Hai has agreed to buy ￥100 billion worth of preferred stock issued by Sharp to its creditors.
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