Bulletin: Pressure On Sharp Creditworthiness To Persist Despite Plant Sale

This report does not constitute a rating action. TOKYO (S&P Global Ratings) Dec. 23, 2024--The planned sale of Sharp Corp.'s Sakai plant will help make progress in structural reforms, but pressure on its credit quality remains amid a harsh business environment. The company's board of directors passed a resolution on Dec. 20, 2024, to sell part of the plant, which produces large-size LCD panels, to Softbank Corp. for about ¥100 billion. On Dec. 9, it announced it had reached agreement with KDDI Corp. to sell other land and buildings at the plant. S&P Global Ratings believes the sale will have a positive impact on Sharp Corp.'s (B-/Negative/B) credit quality because the company will receive cash proceeds. At the same time,

...December 23, 2024 This report does not constitute a rating action. TOKYO (S&P Global Ratings) Dec. 23, 2024--The planned sale of Sharp Corp.'s Sakai plant will help make progress in structural reforms, but pressure on its credit quality remains amid a harsh business environment. The company's board of directors passed a resolution on Dec. 20, 2024, to sell part of the plant, which produces large-size LCD panels, to Softbank Corp. for about Ñ100 billion. On Dec. 9, it announced it had reached agreement with KDDI Corp. to sell other land and buildings at the plant. S&P Global Ratings believes the sale will have a positive impact on Sharp Corp.'s (B- /Negative/B) credit quality because the company will receive cash proceeds. At the same time, we expect that profit on the sale of a certain size would allow the company to recover some equity (approximately Ñ140 billion as of the end of September 2024). However, the deal will not relieve pressure on credit quality, in our opinion. A fundamental...

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