Sharp entered into a subscription agreement with its two main lender banks to issue preferred securities to repay borrowings from each bank. We regard this transaction as a de facto debt-for-equity swap, which we define as 'SD' (selective default). Realization of this transaction is subject to approval of a shareholders' meeting and agreement of certain financial institutions other than Sharp's main lender banks. We are lowering our long-term corporate credit rating on Sharp to 'CCC-' and are keeping it on CreditWatch with negative implications. At the same time, we are keeping our long-term debt rating and short-term corporate credit rating on CreditWatch with negative implications. We will lower to 'SD' our long- and short-term corporate credit ratings on the company
