TOKYO (Reuters) - Ratings agency Standard & Poor’s downgraded Japanese electronics maker Sharp Corp’s debt to ‘CCC+’ from ‘B-', further pushing it into junk territory, citing its deteriorating fortunes even after a bailout by banks earlier this year.
Sharp has struggled to turn around its ailing liquid crystal display (LCD) business due to tough price competition among smartphone screen suppliers, turning to its banks for a $1.7 billion rescue in May, its second major package in three years.
“We think that Sharp will need to restructure existing debt in the next six to 12 months as it progresses a sweeping plan to restructure its LCD business,” S&P said in a note.
“We see at least a one-in-two likelihood that Sharp may have difficulty meeting its financial commitments in this period, and we consider that any debt restructuring may take the form of a selective default under our definition,” S&P said.
Sharp warned last week that it would not book a first-half operating profit as planned due to sliding prices for small and medium-sized screens, instead estimating a loss of 26 billion yen ($214 million). Sources have said its main banks want it to find a buyer for all or part of its LCD business within months.
Reporting by Ritsuko Ando; Editing by Muralikumar Anantharaman