Sharp plans to use capital to wipe out past losses: source
TOKYO (Reuters) - Japan's Sharp Corp (6753.T: Quote) is considering using capital to reduce accumulated losses on its book, an accounting maneuver that would allow the loss-making electronics maker to resume dividend payment earlier, a source said on Saturday.
The Osaka-based maker of LCD displays, scheduled to announce a new turnaround plan Thursday, is set to receive a $1.7 billion bailout from its main lenders in return for a promise to cut 5,000 jobs and split off its ailing smartphone display unit, a separate source told Reuters last month.
As a result of restructuring, the company is expected to report losses of more than 200 billion yen ($1.67 billion) for the year ended in March, on top of combined 900 billion yen losses in the previous three years.
A company that has been making profits has retained earnings from past years and it can use the money for dividend payout for shareholders.
Sharp, which has been suffering massive losses in recent years, had about 20 billion yen accumulated losses on an unconsolidated-basis for the year ended in March 2014. The company has said it will not pay a dividend the year ended in March this year, the third year running it has skipped the payment to shareholders.
Sharp is planning to use most of its 120 billion yen capital to reduce the accumulated losses, so that it can start to accumulate retained earnings when it turns profitable and thus resume dividend payments earlier, the source said.
As a result, its capital could be reduced to as little as 100 million yen, said the person, who was not authorized to discuss the matter publicly.
A Sharp spokeswoman said nothing has been decided and media reports of its capital reduction plan were not based on its statements.
(Reporting by Reiji Murai and Taiga Uranaka; Editing by Alex Richardson)
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