Sharp bailout deal agreed

sharp2Japan’s Sharp and its main banks are about to agree on a $1.7 billion rescue and restructuring plan which involves splitting off its ailing smartphone display business.

This will be Sharp’s second major bailout in three years.  Under the deal Sharp’s lenders, Mizuho Bank and Bank of Tokyo-Mitsubishi, will inject a combined $1.7 billion in a debt-for-equity swap.

Sharp has promised to scale back its North American television operations and cut around 5,000 jobs, or 10 percent of its global workforce.

LCD operations will also be split off in the long term but for now will continue to be owned by Sharp.

What had slowed down the talks was the extent of job cuts and restructuring. Sharp had not wanted to split off the LCD division, which accounts for 30 percent of Sharp’s sales.

Analysts have said splitting off the division could pave the way for a deal such as a merger with rival Japan Display which is something that Sharp does not want.

The deal is all rumour and speculation and nothing will be “official” until May – but it seems to be going ahead.  The deal will be finalised later today.