Plans by Japanese electronics conglomerate Sharp to shrink its capital base will only buy the company time, but its long-term survival remains in doubt, analysts told CNBC.
"It's a desperate attempt to pre-empt insolvency," said BNP Paribas chief credit analyst Mana Nakazoran by phone. The reported measures "will buy the company some time, but I can't say if Sharp will still exist in five years' time."
The Osaka-based maker of LCD displays, which has accumulated losses of nearly 920 billion yen ($7.68 billion) over the past three years on poor sales and stiff competition, has also accumulated a massive debt burden on the way.
The company is reportedly facing a loss of around 200 billion yen the fiscal year that ended March 2015 as a result of restructuring. Its debt meanwhile stood at nearly 2 trillion yen, according its annual report in the previous year.