January 12, 2016 / 3:12 AM / 2 years ago

UPDATE 1-Sharp $3 bln overhaul plan could be concluded this week- source

* Japan state fund offers Sharp more than 200 bln yen

* Sharp seeks 150 bln yen from banks

* Latest rescue would split LCD business, merge with Japan Display (Adds details, context)

By Taro Fuse

TOKYO, Jan 12 (Reuters) - A $3 billion restructuring plan for Japanese electronics firm Sharp Corp is likely to be finalised as early as this week, a person with direct knowledge of the discussions said on Tuesday.

State-backed fund Innovation Network Corporation of Japan (INCJ) is leading the bailout, which would be Sharp’s third major package in three years, and would invest more than 200 billion yen ($1.7 billion) in the plan, the source added, confirming earlier media reports.

The Osaka-based company is also asking Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank to convert about 150 billion yen ($1.3 billion) of existing loans into preferred shares, said the source, who declined to be named as the discussions remained confidential.

Sharp said in a statement it is in talks with various companies about LCD business but no decision have been reached, while spokesmen for the banks, units of Mitsubishi UFJ Financial Group Inc and Mizuho Financial Group Inc, declined to comment.

Sharp shares surged nearly 8 percent in early trade on reports of the bailout but ended morning trade down 0.9 percent.

INCJ, tasked with helping to revive Japan’s once-cutting edge consumer electronics sector, would merge Sharp’s liquid-crystal display business with that of Japan Display Inc , the source said.

INCJ is the biggest shareholder in Japan Display and a spokesman for the company declined to comment on the matter. An INCJ representative could not immediately be reached.

Despite a $1.7 billion rescue in May, Sharp has shown few signs of a turnaround as it and other Japanese consumer electronics makers struggle to compete against the likes of Samsung Electronics Co and more nimble Asian rivals.

Sharp has also received an investment offer from Taiwan’s Hon Hai Precision Industry Co, also known as Foxconn, people with knowledge of the matter said last month. These sources have also cited private equity interest, and the Nikkei business daily has named U.S. buyout fund KKR & Co as a potential investor.

$1 = 117.7000 yen Reporting by Taro Fuse; Additional reporting by Makiko Yamazaki and Taiga Uranaka; Writing by William Mallard; Editing by Miral Fahmy

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