Sources Say Foxconn and Sharp Heading Towards an Agreement Following One Month’s Delay
Taiwan based Hon Hai Precision Industry which is better known as Foxconn Technology Group, and Sharp, the troubled Japanese electronics giant have reached an agreement of a 100 billion yen bailout ($884 million) which is less than what was earlier planned said sources with knowledge of the matter. A board meeting of Hon Hai and Sharp on Wednesday will be held for approval and signing of deal. The acquisition agreements are expected to be signed the next day.
Masahiko Ishino, an analyst at Tokai Tokyo Securities said, that some of the investors were starting to worry that Foxconn will walk away from the deal. He said "The shares are rebounding on renewed confidence that the investment seems on track."
Sources say, the earlier deal of 489 billion yen offered for newly issued by Foxconn for Sharp stock will be cut to approximately 100 billion yen. Both the sides have agreed to the deal including Mizuho Bank and Bank of Tokyo- Mitsubishi UFJ, two of the main creditors for Sharp.
The company from Taiwan will also help in paying back 510 billion yen loans of Sharp completely at an interest rate that is not more than 0.6perncent. People close to the matter said, Foxconn will require buying 200 billion yen in preferred shares that's owned by Sharp's main creditors over three years.
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