By Sophie Knight
TOKYO (Reuters) - Sharp Corp is set to raise 119 billion yen ($1.23 billion) in a public share offering, 20 percent less than targeted after concerns about competition for its display and solar panel businesses drove down its shares ahead of the issue.
The shortfall in funds could curb Sharp's efforts to turn around its operations which, along with fellow Japanese consumer electronics companies such as Panasonic Corp and Toshiba Corp, have suffered from a slump in TV sales as foreign rivals encroached on their market.
Sharp, in a filing to the stock exchange on Monday, said it aims to raise a maximum 119 billion yen with a public issue of 450 million shares, below the 148.9 billion yen it indicated on September 18.
Its shares have fallen 21.4 percent since then, when the company said it would sell the equivalent of 43 percent of outstanding shares. A sale will dilute the value of outstanding shares, giving investors a reason to sell.
Sharp priced its new shares at 279 yen each, 4.1 percent lower than the price of its outstanding shares at the close of trade on Monday, when it fell 8.2 percent to a six-month low.
Sharp on Monday also said it would sell 55 million shares - up from 45 million shares due to the drop in its share price - for 17.5 billion yen to Lixil Group Corp, Makita Corp and Denso Corp via a third-party allotment, taking the total amount of equity it will raise to 136.5 billion yen.
"If you consider their restructuring plans this looks like a compromise. They're going for more than 130 billion yen, which is good for their finances. But the focus on their fundamentals has sharpened and on whether they can turn a stable profit," said Advanced Research Japan senior analyst Masahiko Ishino.
The company said it would invest 50 billion yen of the equity raised in its TV and display unit, where overseas sales have been pinched by a strong yen and competition from rivals such as Apple Inc and Samsung Electronics Co Ltd.
Sharp posted a net loss of 545 billion yen ($5.61 billion)for the year ended March, leaving its capital below 6 percent of equity, which is well short of the 20 percent widely regarded as a financially stable threshold for manufacturers.
Analysts say company may not be able to make it over 10 percent by the end of this year, even with this capital injection.
However, stronger than expected sales of solar panels and batteries in the first quarter prompted Sharp to narrow its net loss projection to 10 billion yen from 20 billion for the six months to September.
Last year, the company received a 360 billion yen bailout from creditor banks and has since received investments from Samsung Electronics Co Ltd and Qualcomm Inc.
($1 = 97.1350 Japanese yen)
(Additional reporting by Hirotoshi Sugiyama; Editing by Matt Driskill and Christopher Cushing)