Sharp Shares Dive As Company Hunts For Money
The Nikkei Asian Review had reported Sharp plans to reduce its capital by 99 per cent to 100 million yen (around $1.05 million), which would see Sharp place itself in a lower corporate tax bracket.
Sharp’s main lenders and possibly corporate turnaround funds are expected to agree to debt-for-equity swaps or purchases of preferred shares as part of the restructure, the Nikkei further reported.Responding to media speculation, in a statement issued today Sharp said it is yet to decide on a course of action.
As reported by Bloomberg, Sharp shares at one point slid by as much as 31 per cent.
“The main purpose of the capital cut in Sharp’s case is to erase retained losses and make the company able to distribute dividends again,” Bloomberg reported Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, as stating.
“The issue here is that it’s likely to be issuing preferred shares at the same time, so there is dilution concern. Preferred shares would have priority in receiving dividends.”
Sharp has stated that its medium-term management plan will be announced on May 14.