TOKYO Sharp Corp, Japan's largest display maker, is considering another issue of new shares that could raise around 200 billion yen ($1.97 billion) to replenish its depleted capital base, the Asahi newspaper reported on Sunday.
Sharp is aiming to launch the offering during the current financial year to March 2015 after carrying out restructuring at its flagship Kameyama LCD display factory and putting its earnings on a solid recovery path, the newspaper said.
No one at Sharp could be reached for comment on Sunday.
The reported move comes after Sharp announced in February that it would beat a previous operating profit forecast for the financial year ended last month on the back of strong orders from Chinese makers for smartphone panels.
On a net basis, Sharp is forecasting a profit of 5 billion yen for the year just ended, which would mark a return to the black after losing a cumulative 921 billion yen over the previous two years amid fierce competition in the LCD market.
Sharp raised about 140 billion yen in the final months of 2013 but its equity ratio - a key measure of financial stability - stood at just 13 percent at the end of December, below the 20 percent threshold that is considered healthy.
There are many people, including some of Sharp's bankers, that have voiced opposition to the move given that Sharp would be embarking on a large-scale equity financing two years in a row, the Asahi report said.
To seek the understanding of its stakeholders, Sharp aims to come up with a restructuring plan that will focus on shoring up the Kameyama plant in Mie Prefecture, which has struggled with big swings in operating rates, the newspaper said.
Sharp has been reducing output of large, TV-use LCD panels and shifting focus to smaller panels for high-end smartphones. The company is aiming to lower costs further so that it can tap into booming demand for lower-end models, the Asahi said.
There is a chance Sharp would not be able to raise the desired amount of funds from the market if its earnings and stock price languish, the Asahi said, adding that the company would look to make a decision on the share offering in 2014. (Reporting by Nathan Layne; Editing by Paul Tait)