On March 30, Sharp said it will issue new shares through third-party allocations totaling ¥388.8 billion to Taiwan's Hon Hai and its group companies by Oct. 5, 2016. Signing of the agreement is planned for April 2. Lender banks have extended maturities on Sharp's existing syndicated loans by one month to April 30, 2016. We think lender banks accepted the maturity extension on the basis Hon Hai has much higher credit quality than Sharp. Accordingly, we neither treat the extension as a debt restructuring nor as a selective default (SD). Despite significant deterioration in Sharp's earnings, its financial standing would improve materially if the capital increase occurs as planned. Also, Sharp could somewhat ease wide swings in the profitability of
