(MENAFN- AFP) Sharp shares dropped on Tuesday after a report said the struggling Japanese electronics firm will ask its key lenders for aid, as it eyes the closure of money-losing units.
The Tokyo-listed stock plunged nearly 10 percent in opening trade, but later narrowed its losses to finish 3.54 percent lower at 245.0 yen.
Investors were spooked after Japan's leading Nikkei business daily, without citing sources, said Sharp wanted to enhance its capital base as it tries to restructure, and may enter into a 150 billion yen ($1.24 billion) debt-for-equity swap.
The company plans to request aid from Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, it said.
The Nikkei also reported that Sharp is considering closing four domestic factories that produce electronic components, as well as withdrawing from its solar cell business.
As the company writes off production equipment in unprofitable businesses, its net loss for the year ending in March is likely to exceed 100 billion yen, up from the company's own loss forecast of 30 billion yen, the business daily said.
Sharp's forecast of a fiscal year net loss, announced last month, reversed previous profit forecasts.
Osaka-based Sharp -- which lost 7.2 billion yen in the nine months to December -- earlier cited a "deterioration" in sales at home and fierce competition in the liquid crystal display business for its financial woes.
Last month, the firm vowed to take "drastic" cost-cutting measures, review its unprofitable businesses and "further streamline" head office.
As early as this week, Sharp will lay out its earnings outlook and structural reform plans to the banks, which will review the proposal before deciding whether to extend support, the Nikkei reported.
Sharp would not confirm the report, saying it was working towards a "drastic reform" of its operations but added that nothing had been decided.
The company said it did not expect to further revise full-year earnings forecasts.
Sharp is a major electronics maker whose product line includes the Aquos brand and is also a key supplier for Apple.
But the company, along with rival Sony and Panasonic, has been undergoing painful restructuring to move past years of struggle largely tied to huge losses in its TV unit, hit by lower-cost rivals.
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