TOKYO (AFP) - Shares in Japan's Sharp plunged 31 per cent on Monday after weekend media reports that the struggling electronics maker is planning a drastic capital reduction to help wipe away losses.
Stocks in the company fell to 178 yen in early trade, down 80 yen from Friday - the maximum daily loss - although subsequently bounced back to 202 yen, down 21.7 per cent, by mid-morning.
Weekend reports said Sharp plans to reduce its capital by 99 per cent to just 100 million yen (S$1.11 million), the upper limit for the category of small and mid-sized companies with tax advantages.
The Osaka-based company also plans to use surplus money squeezed out of the capital reduction to wipe away years of accumulated losses, the Nikkei and other media said.
Sharp said early Monday a capital reduction could be an option as it restructures but nothing definite had been decided.
"As for our capital policy, we have been making various considerations including issuance of preferred shares and a capital reduction but there has been no decision made," the company said in a statement.
The company is to announce a mid-term business plan on Thursday.
Sharp is a major electronics maker whose product line includes the Aquos brand. It is also a key supplier for Apple.
But the company has been undergoing painful restructuring to move past years of difficulty - largely tied to huge losses in its TV unit, which has been hit by lower-cost rivals.