Reuters: Technology News: Sharp may close Europe, U.S. solar units to secure financing: sources

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Sharp may close Europe, U.S. solar units to secure financing: sources Sep 27th 2012, 00:54 By Reiji Murai and Taro Fuse TOKYO | Wed Sep 26, 2012 8:54pm EDT TOKYO (Reuters) - Japan's Sharp Corp has offered to shut its solar panel businesses in Europe and the United States as a further cost cutting measure to persuade banks to extend $2.7 billion of the fresh financing it needs to stay in business. Lenders led by Mizuho Financial Group and Mitsubishi UFJ Financial Group are likely to approve a new batch of loans to prop up the ailing display maker as early as Thursday, sources earlier told Reuters. That 210 billion yen of lending will be on top of 150 billion yen ($1.93 billion) of loans already made to Sharp, which has to pay as much as 360 billion yen of short-term commercial paper over the coming months. Sharp's stock dipped 1.5 percent in early trading in Tokyo, compared with a 0.4 percent fall in the benchmark Topix index. Sharp, which has already mortgaged most of its factories and offices in Japan, including one that makes displays for Apple Inc.'s iPhone and iPad, needs to convince banks it can end losses and return to profit in the next business year if it is to unlock additional financing. In the business proposal submitted to lenders, Sharp predicts it can achieve an operating profit of 121 billion yen in the year beginning April 1, compared with an operating loss of 115 billion this term, the sources said on condition they were not identified. As part of that, Sharp would shut module assembly plants, one in the U.S. and one in Britain, the sources said. The company would also need to dissolve a partnership with Italy's leading power producer Enel SpA, which last year opened a joint panel production plant. Sharp, which a decade ago was the world's leading maker of solar panels with around a fifth of the market, also plans to consolidate production at several Japanese sites into one location. TV PLANT SALE Other cost-cutting measures and asset sales Sharp has proposed include the sale of overseas TV assembly plants. Sharp is already in talks to sell plants in Mexico and China to Taiwanese partner and fellow Apple supplier Hon Hai Precision Industry Co. The two companies jointly operate a TV display plant in western Japan. Sharp has also offered to sell a third assembly plant in Malaysia. Removing the workers at those sites from its payroll would, when added to 5,000 planned layoffs, shrink the company's workforce by more than 11,000 people, or by about a fifth. The company is also asking its remaining workers to accept pay cuts as steep as a tenth of their salary. Talks to sell a 9.9 stake to Hon Hai, a sale which would make the Taiwanese company its biggest shareholder, have, however, stalled after an agreement had been expected in August. Hon Hai has said it wants a management role in return for its cash. Sharp has denied a local report that it is in talks to make Intel Corp its biggest stockholder instead, but sources have said it is in talks to supply panels for ultra-thin laptops that typically use processors made by Intel. (Additional reporting by Taiga Uranaka; Writing by Tim Kelly; Editing by Daniel Magnowski) Link this Share this Digg this Email Reprints

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