MUFG Mitsubishi UFJ Financial Group Inc

Foxconn Technology Group doesn't plan to adjust its planned ¥ 489 billion ($4.30 billion) investment in embattled Japanese consumer-electronics company Sharp Corp. but terms for creditors could be revised as negotiations continue, people familiar with the matter said.

The two companies aim to seal a near $6 billion deal early next week after one more round of negotiation, the people said. Foxconn and Sharp are optimistic that the Japanese company's recent disclosure of an additional ¥ 350 billion in contingent liabilities or potential financial risk, won't derail the deal, the people said.

Since Monday, Foxconn and Sharp have deployed hundreds of people across all of Sharp's locations to study the latest list of financial risk, the people said. The teams have been meeting around the clock and late into the night to determine whether the new risks are acceptable, the people said.

A Sharp spokesman said negotiations are continuing with Foxconn and declined to comment when asked whether the company's board would need to meet again to approve revised deal terms.

Foxconn didn't immediately reply to a request for comment.

Battered by price declines in smartphone screens, Osaka-based Sharp decided last week to accept a takeover offer from Foxconn, known formally as Hon Hai Precision Industry Ltd. But the Taiwanese company, which assembles Apple Inc.'s iPhones, paused to seal the deal, saying it needed more time to review important information that Sharp disclosed at the last minute of negotiations.

People familiar with the matter said earlier Sharp had disclosed more than 100 items of contingent liabilities including possible tax claims by the Japanese government, intellectual-property lawsuits and potential damages from patent infringement claims against Sharp.

Sharp faces a March 31 deadline to repay a total of ¥ 510 billion in borrowings. Main lenders need Sharp to reach an agreement on the takeover deal before renewing the loans, bankers said.

Under the deal outlined by Sharp last week, it would issue new shares to Foxconn in exchange for an infusion of ¥ 489 billion. Sharp said Foxconn would purchase preferred shares held by two creditors—the core banking units of Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc.—for ¥ 100 billion.

Other payments that people familiar with the matter said would total about ¥ 70 billion would bring the total commitment by Foxconn to ¥ 659 billion, or $5.80 billion.

It wasn't immediately clear how much Foxconn is willing to pay creditors for the preferred shares under revised terms.

Foxconn's offer was double what a government-backed Japanese fund—Innovation Network Corp. of Japan—was offering and included relief for Sharp's two main banks, which are saddled with the company's debt.

The deal is being watched closely not just because of its implications for Japan's reputation for protecting its prized industrial names from foreign ownership, but because it also could mark a passing of the technological generations: 103-year-old Sharp was a pioneer of the modern television set in Japan; Foxconn, founded more than four decades ago, has grown into a $120 billion behemoth thanks to its proficiency in assembling smartphones.

Eva Dou in Beijing contributed to this article.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Wayne Ma at wayne.ma@wsj.com

(END) Dow Jones Newswires

March 03, 2016 23:15 ET (04:15 GMT)

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