Japan's Sharp Corp confirmed it had won a $4.6 billion bailout led by Mizuho Financial Group and Mitsubishi UFJ Financial Group, a deal that ends Sharp's immediate debt crisis but fails to resolve doubts about its future, Reuters reports.
Sharp said it has signed syndicated loan agreements with Mizuho and Mitsubishi UFJ for a 180 billion yen ($2.32 billion) term loan and a loan facility of an equal amount.
The two banks will invite other lenders to join a syndicate to spread the risk, with life insurer Resona Holdings likely to join, a banking source told Reuters on condition of anonymity. Many other financial institutions are cautious because of continued worries about Sharp's future.
The new lending will keep Sharp – which needs to repay as much as 360 billion yen of short term commercial loans over the coming months – in business, and could in turn give the banks a greater chance of recouping more than 300 billion yen in loans already extended to the embattled company.
The century-old firm, which made its start with ever-sharp mechanical pencils, expects to lose more than 100 billion yen this business year, sources say, as it struggles to compete against rivals including South Korea's Samsung Electronics.
