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The Nikkei business daily earlier reported that
the LCD unit, which supplies displays to smartphone and tablet
manufacturers, will be spun off in the current fiscal year and
that INCJ could invest 100 billion yen in the new entity.
The source said Sharp, as part of its restructuring plan, wants
to keep a majority in the LCD unit, and that details of an INCJ
stake have not been decided.
A Sharp spokesman, while confirming the company was considering
various reforms for its LCD business, said no decision had been
made.
Sharp, on track for its third annual net loss in four years, has
been trying to negotiate its second major bailout since 2012,
with the company promising restructuring in return for new
funds.
Sources say its main lenders Mizuho Bank and Bank of
Tokyo-Mitsubishi UFJ are seeking a radical overhaul and an exit
from loss-making businesses. Mizuho Bank is a unit of Mizuho
Financial Group Inc <8411.T> and Bank of Tokyo-Mitsubishi UFJ is
part of Mitsubishi UFJ Financial Group Inc <8306.T>.
While promising to come up with restructuring measures by May,
Sharp has repeatedly denied it will make moves such as selling
its LCD unit.
The unit accounts for roughly one-third of sales but has
struggled with tough price competition from Chinese
manufacturers as well as domestic rival Japan Display, which is
35 percent owned by INCJ.
Analysts have speculated that Sharp could merge its display
business with Japan Display to gain competitiveness and pricing
power, though sources at Sharp have recently said its management
was not willing to take that step.
Japan's government launched INCJ in 2009 in a bid to keep the
country's technology sector competitive.
The state provided 286 billion yen of INCJ's capitalization of
300 billion yen, and its investments are overseen by the
Ministry of Economy, Trade and Industry. An investment by INCJ
in Sharp's LCD business would fuel speculation of a future deal
between Sharp and Japan Display.
Sources earlier said Sharp has also asked domestic corporate
turnaround fund Japan Industrial Solutions to invest up to 30
billion yen, and for a rescue package from its banks.
Among backers of the turnaround fund are Mizuho, Bank of
Tokyo-Mitsubishi and state-backed Development Bank of Japan.
(Reporting by Reiji Murai; Writing by Ritsuko Ando; Editing by
Richard Borsuk)
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