OSAKA -- Taiwan's Hon Hai Precision Industry is considering parting with a roughly 1% interest in Sharp as soon as this year to clear a barrier to the Japanese unit's return to the first section of the Tokyo Stock Exchange.
For a company to list its stock on the Tokyo bourse's first section, at least 35% of its outstanding shares must be made available for trading on the exchange. But Hon Hai, which is also known as Foxconn, along with several of its group companies, holds a combined 66% stake in Sharp.
Sharp fell into liabilities in excess of assets on a consolidated basis at the end of the year through March 2016. This prompted the TSE to move Sharp shares from its first section to the second section last summer.
Meanwhile, Foxconn lifted the Japanese company out of the financial hole by injecting capital through a new share offering. Thanks to cost-cutting efforts under the Taiwanese parent's lead, Sharp's earnings have been on the mend, with the first group pretax profit in three years expected for the current year through this month.
Getting back to the TSE first section is a priority in Sharp's efforts to regain credibility. President Tai Jeng-wu, a Foxconn executive sent to manage Sharp, has said he will work toward returning Sharp to that rank by the year beginning April 2018. Since the company already meets some of the conditions, such as market capitalization and the number of shareholders, it is looking to relist on the first section as soon as by the end of this year.