Two of Japan's largest banks are heading the US$2.7 billion rescue of the bankrupt electronics giant.
Mizuho, one of Sharp's main lenders, formerly resisted participating in the bailout but has since relented. The financial and market situations remains serious for Sharp, which expects to lose more than US$1.3 billion this business year chiefly because of competition from Korean rivals such as Samsung Electronics.
Mizuho and BTMU will lend Sharp some US$2.7 billion in addition to the US$1.9 billion in loans already made to Sharp, which must repay some US$4.6 billion in short-term commercial paper over the coming months.
Mizuho and BTMU want other firms including Resona Holdings to take over half of those US$4.6 billion loans, according to banking industry sources.
Sharp has already mortgaged most of its offices and factories in Japan, but still needs to convince banks it can become profitable in the next business year to secure additional financing.
In a business proposal to lenders, Sharp claims it can achieve an operating profit of US$1.5 billion in the year beginning April 1 compared to an operating loss of US$1.5 billion this term. Given the uncertainty of sales picking up, much of the turnaround plan is based on cost cutting.
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