Sharp to buy back US$233m in preferred shares

[TOKYO] Japan's Sharp Corp, taken over by Taiwan's Foxconn earlier this month, said it would buy back 25 billion yen (S$313 million) in preferred shares that it issued to a corporate turnaround fund last year in exchange for a bailout.

The move is aimed at limiting its dividend payments, set for the preferred shares at an annual rate of 7 per cent until March 2018, and 8 per cent after that, the company said on Friday.

The preferred shares were issued to Japan Industrial Solutions (JIS) as part of a bailout last year in which the company's main lenders Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ also injected a combined 200 billion yen in a debt-for-equity swap. JIS's owners includes the two banks.

It was Sharp's second big bank-led rescue in three years, but the company continued to struggle to shake off losses as its smartphone display business was battered by competition from Asian rivals.

Earlier this month, Sharp and Foxconn, formally known as Hon Hai Precision Industry Co, signed a US$3.5 billion takeover deal.

REUTERS