Ratings agency Standard & Poor's Friday downgraded Japanese electronics maker Sharp's credit rating by two notches to "CCC-," citing the firm's decision to accept a bank bailout.
The downgrade came after the troubled firm announced it was taking a multi-billion-dollar bailout and laying off about 10% of its 49,000-strong global workforce to deal with huge losses.
"Sharp entered into a subscription agreement with its two main lender banks to issue preferred securities to repay borrowings from each bank," S&P said in a statement.
"We regard this transaction as a de facto debt-for-equity swap, which we define as 'SD' (selective default)," it said.
Sharp has been working to move past years of gaping deficits, partly caused by steep losses in its television unit, which has been hammered by competition from lower-cost rivals, particularly in South Korea and Taiwan.
The embattled Aquos-brand maker said Thursday it posted a bigger-than-expected $1.86 billion annual loss for the year to March.
—Sharpa major Apple supplier and leader in screens for smartphones and tablets—said it would issue 200 billion yen worth of new shares with no voting rights to Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ as part of its bid to repair a badly damaged balance sheet.
Along with the global job cuts, the company said it would sell the building that houses its Osaka headquarters to raise cash, roll out unspecified pay cuts, and launch a drastic capital reduction plan to wipe away huge losses.
On Monday, the company lost more than a quarter of its market value following media reports that it was planning a drastic capital reduction and the sale of preferred shares, spooking investors who worried about their holdings being diluted.
Copyright Agence France-Presse, 2015