Sharp revival plan unlikely to include Hon Hai capital: sources

A sign hangs in the Sharp booth on the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013.

TOKYO (Reuters) - Sharp Corp is unlikely to include a capital infusion from Hon Hai Precision Industry Co Ltd in its turnaround plan as talks between the two companies have hit a snag, sources familiar with the matter said.

The Japanese consumer electronics maker and its main lenders are drawing up a business plan to convince shareholders and creditors that Sharp can survive its ongoing difficulties with debt and fierce competition from foreign brands.

The tieup with the Taiwanese company, best known as one of Apple Inc's manufacturing partners, would have been the pillar of Sharp's revival efforts. But talks to sell a 9.9 percent stake to Hon Hai have stalled over arguments about executive control, as the March deadline looms.

"We cannot make a plan based on something that is uncertain. For us, it's over," said a banking source who declined to be identified because they were not authorized to discuss the matter publicly.

Without a Hon Hai's capital infusion, the Osaka-based firm will need to devise other ways to boost its capital. It must also persuade its creditors to refinance debts. In October, it won a $4.4 billion bailout from its banks to repay short-term loans and stave off failure.

In December, chip maker Qualcomm Inc agreed to invest as much as $120 million in Sharp. As part of that agreement, Qualcomm said it would work with Sharp to develop new, power-saving screens based on Sharp's IGZO technology.

Sources said drawing up Sharp's business plan has fallen behind schedule as the company has yet to come up with convincing growth strategies, and an announcement is not likely to come until after its new financial year which starts in April.

A Sharp spokeswoman declined to comment.

(Reporting by Taiga Uranaka and Reiji Murai; additional reporting by James Topham; Editing by Daniel Magnowski)