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Investors cast doubts on future of Sharp Corp.

TOKYO -- Sharp Corp. shares fell almost 13 percent and ratings agency Standard & Poor's downgraded the company's debt to junk, underscoring growing concerns about the ability of the loss-making firm to pay its debts and revive its business.

The stock suffered its sharpest decline in almost a month on Friday, after the abrupt departure of Hon Hai Precision Industry Co. Ltd.'s chairman from Japan fuelled uncertainty over a tie-up expected to help secure the long-term viability of the Japanese LCD TV panel maker.

Sharp, which also makes screens for Apple Inc.'s iPad and iPhone, has been hammered by aggressive competition and sluggish TV demand. “Sharp's liquidity position is weakening, in Standard & Poor's view. Internal cash flow remains weak, and financial market conditions for the company have deteriorated,” the agency said in a statement on Friday.

“Our current ratings incorporate an assumption that Sharp will reach an agreement” with Hon Hai, it said.

Standard & Poor's said it was keeping Sharp's reduced BB+ debt rating on negative watch for a possible further downgrade.

The century-old firm is discussing a partnership with Hon Hai that would give the Taiwanese company a 9.9-percent stake and more muscle to cut costs.

Sharp's shares closed 12.8 percent lower on Friday, their biggest one-day percentage fall since Aug. 3.

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