Sony agreed to sell its US headquarters
Electronics giant Sony has announced that it agreed to sell its US headquarters in Manhattan, New York, as it looks to restructure its global operations after recording losses in four straight years.
The skyscraper at 550 Madison Avenue will be sold to a consortium led by New York-based Chetrit Group, for $1.1bn (£690m, €823m). After repaying debts on the property, the company will receive net proceeds of about $770m from the deal.
The Japanese company, which produces Bravia TVs and PlayStation 3, expects to generate a gain of approximately $685m from the deal.
"Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth," the company said in a statement.
"At the same time, 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. This sale is made as a part of such initiatives."
Following the sale, the company will lease back the 37-story building, where its businesses including Sony Music Entertainment, Sony/ATV Music Publishing, Sony Pictures Entertainment are operating. The businesses will continue to operate in the building at least for three more years.
The building was built in 1984 and houses 1,500 Sony employees. Sony expects to settle the transaction in March.
The company recorded consecutive losses for the last four years on stiff competition across the globe primarily from Microsoft, Apple and Google, and cheaper Asian competitors such as LG and Samsung. In particular, Sony's TV division has been making loss for the ninth straight year.
Hurt by the weak market conditions, Sony shares were trading below the 1,000-yen level in 2012 for the first time in over two decades. Further, its credit rating has been downgraded to "junk" by Fitch in November.
With a view to recover from continuing losses, Sony has initiated a major restructuring programme, including the sale of its chemicals division and slashing of 10,000 jobs.
It was also looking to get rid of many of its assets, including the US headquarters. There were reports that Sony is also planning to sell its Tokyo building for between $1bn and $1.5bn.
Sony noted that it is currently re-evaluating its forecast for the current fiscal year ending 31 March in order to include the gain from the sale and other factors affecting the business.
On 1 November, the company said that it expects to record a net income of 20 billion yen for the year, on revenues of 6.6 trillion yen.
This article is copyrighted by IBTimes.co.uk, the business news leader