Business / Corporate

LCD maker Japan Display reaches bailout deal with China-Taiwan consortium

Kyodo

Display panel maker Japan Display Inc. has reached a broad agreement to receive a capital injection of ¥60 billion ($538 million) to ¥80 billion from a Chinese-Taiwanese consortium, a source close to the matter said Wednesday.

The company, known as JDI, is a key supplier for Apple Inc. and is set to sign the deal with China’s Silk Road Fund and Taiwan’s TPK Holding Co. early next week.

The deal offers a lifeline the firm needs to rebuild its finances and continue investing in new panel technologies, at a time when it is expecting a net loss for the fifth straight year in fiscal 2018 ended March, the source said.

Japan Display has been working to achieve a turnaround with the help of government-backed fund INCJ Ltd., its biggest shareholder, which owns 25.3 percent.

The Chinese fund and TPK consortium will become JDI’s top shareholder, with a stake of less than 50 percent, according to the source. INCJ’s stake will be reduced to less than 20 percent as a result.

JDI said Wednesday that it is in negotiations over a capital injection and is expecting to seal a deal early next week. It had previously said it was aiming to reach an agreement this week.

INCJ is also expected to refinance JDI by tens of billions of yen, including through a conversion of debt to preferred shares, bringing the total capital injection to the display panel maker to over ¥110 billion, JDI has said.

Japan Display, formed in 2012 through a merger of the LCD operations of Hitachi Ltd., Sony Corp. and Toshiba Corp., has attributed its expected net loss to slowing sales of display panels for Apple products.

Japanese electronics makers have been fiercely competing with South Korean rivals such as Samsung Electronics Co. in developing advanced display panels.

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