BDTI’s Representative Director Nicholas Benes is quoted in his article about Sharp in the Financial Times this morning. Excerpts:
Sharp, a century old stalwart of corporate Japan, has unveiled an annual loss of $1.9bn and warned of “material uncertainty” about its ability to stay in business, less than three years after facing a similar crisis of survival.
Undeterred, banks are pumping money into Sharp in a debt-for-equity swap – suggesting the concept of propped-up zombie companies, replete with complacement management, is far from dead in Japan.
While many of its erstwhile struggling peers have since taken a more aggressive approach to axing laggard business lines, Sharp has pursued modest and tardy restructuring which has failed to stem losses in the face of cheaper, nimbler Chinese rivals…
“There exist events or conditions that may cast a material uncertainty about Sharp’s ability to continue as a going concern,” the company said in its earnings statement….
However, government officials oppose selling off businesses to foreign players due to concerns over the loss of Japanese technology. “A lot of people will wonder if Sharp should have sold itself earlier,” said Nicholas Benes, a Tokyo-based corporate governance and M&A expert who took a lead role in proposing Japan’s corporate governance code.
“Four years ago, management should have got Sharp in the hands of a parent that can take better care of the company than the banks,” he added.