OSAKA -- Hon Hai Precision Industry is holding off on signing a Sharp acquisition deal as the Taiwanese company negotiates with main lenders for additional support following revelations of the Japanese electronics manufacturer's contingent liabilities.
Hon Hai, also known as Foxconn, says it has no intention of giving up on purchasing Sharp. But plans to sign the final contract in early March have been delayed.
Sharp President Kozo Takahashi met with Hon Hai Chairman Terry Gou in Taipei on Monday. Talks between the two companies have continued intermittently, and some sources expect a deal to be inked this week. But others say the timeline is uncertain as Hon Hai irons out details with Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ.
Hon Hai apparently wants the banks, units of Mizuho Financial Group and Mitsubishi UFJ Financial Group, to provide Sharp with financial assistance in case its potential obligations are incurred. One proposal calls for Hon Hai to buy preferred shares in Sharp held by the banks for less than the initially planned 100 billion yen ($879 million).
The two banks are expected to roll over a 510 billion yen syndicated loan to Sharp that comes due March 31. They may agree to lower the interest rate if they see the possibility of rehabilitation increasing with the backing of Hon Hai.