Sony flogs US headquarters for $1.1 bn
Firm claims cash injection will kickstart revival.
Sony is set to sell its New York headquarters for $1.1 billion as the cash-strapped giant attempts to raise funds for what could turn out to be a critical 12 months for the firm.
The Japanese manufacturer confirmed that it expects to make $770 million after paying off costs relating to the building and transaction. Approximately $685 million will be recorded as operating income, the firm noted in a statement.
Sony claims the sale will strengthen its financial foundation and help it to grow in the future.
“[Sony] is balancing cash inflows and outflows while working to improve its cash flow by carefully selecting investments, selling assets and strengthening control of working capital such as inventory,” the firm noted.
The purchaser lined up is a consortium headed by The Chetrit Group and the transaction is expected to close by March 2013.
Sony has confirmed that figures from the sale will be included in its end of year financials, bumping them up substantially – and this could increase shareholder confidence.
The headquarters is home to some of the key parts of the company. Employees from Sony Corporation of America, Sony Music Entertainment, Sony/ATV Music Publishing and Sony Pictures Entertainment are all based there.
The firm confirmed that employees will remain in the building for up to three years under a leaseback arrangement with the purchaser.
There are also reports that Sony may carry out a similar transaction in Tokyo as it fights to balance the books and start generating profit.
However, it remains to be seen whether the injection of cash will just provide short-term relief or will be the beginning of a long-term revival.
Credit agency Fitch cut Sony's rating at the end of 2012 to junk status and claimed it could struggle to survive as its consumer business is being eroded by competitors such as Samsung.