Japan Industrial Solutions backs beleaguered Sharp

The capital injection is being led by the company's creditors - Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ - which will together pay JPY200 billion for 200,000 Class A shares priced at JPY1,000 apiece. Sharp has agreed to sell JIS Fund I 25,000 Class B Shares at the same price.

In return, Osaka-headquartered Sharp will undergo a massive restructuring which will see it cut 10% of its global workforce as it looks to recover from a larger-than-expected JPY222 billion net loss for the financial year ended March 2015.

In a statement the company said it had been working to return to profit following the global financial crisis and increasing competition from abroad - which culminated in a JPY545 billion net loss in 2013 - by focusing on new markets, specifically Southeast Asia, and reducing costs.

Sharp managed to return a net income of JPY11.5 billion in 2014, but start making losses again last year. Among other things, the company cited the decline of its LCD TV business in North America, its inability to adapt quickly enough to changes in the market, its delay in launching business in growing areas, weak cost competitiveness, and insufficient corporate governance and business management.

JIS was set up in 2010 by a consortium comprising the Development Bank of Japan (DBJ), Mizuho Bank, Sumitomo Mitsui Banking Corporation (SMBC), Bank of Tokyo Mitsubishi UFJ, Mitsubishi Corp, and company management.

This is the eighth investment to come via the GP's debut vehicle, which was launched with a target of JPY100 billion. An initial capital injection of JPY30 billion came from Bank of Tokyo, DBJ and SMBC, with each group providing JPY10 billion. There were also undisclosed commitments from Mitsubishi Corp. and Deutsche Bank.

The fund predominantly focuses on providing mezzanine capital to mid-size companies in the manufacturing sector. Earlier this year it acquired Meiko Shokai, a Japanese manufacturer of document shredders, from Jafco. It has also backed textiles manufacturer Unitika, to which it committed JPY10 billion in May 2014, and wire-rope manufacturer Tokyo Rope, which received JPY2.5 billion in the same month.

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• Topics
• North Asia
• Consumer
• Technology
• Credit/Special Situations
• Japan
• Consumer
• Technology
• manufacturing
• Distress
• Japan Industrial Solutions (JIS)