Business / Corporate

Japan Display inks deal for ¥80 billion bailout by Chinese and Taiwanese firms

Kyodo

Japan Display Inc. has signed a deal to receive an ¥80 billion ($715 million) capital injection from a group of Chinese and Taiwanese firms, leaving its revival, initially planned under a Japanese government-backed fund, in the hands of foreign companies.

Japan Display, a key supplier to Apple Inc., said Friday China’s Silk Road Fund and Harvest Tech Investment Management, as well as Taiwan’s TPK Holdings and Fubon Financial Holdings, will together own 49.8 percent of its shares once the payment, due by Dec. 30, is made.

In addition, state-backed INCJ Ltd. will convert part of its commitment lines and other debts in Japan Display to preferred shares, boosting the display-maker’s capital by ¥117 billion in total.

The ailing manufacturer, created in 2012 by the government-sponsored merger of the display operations of Sony Corp., Hitachi Ltd. and Toshiba Corp., has tried to expand with support from INCJ.

Japan tried using public funds to support the manufacturer as one of its prominent technology firms, but failed amid fierce price competition with rivals in South Korea and China.

While the Tokyo-based company’s delay in developing technologies for organic light-emitting diodes (OLED) also dented its competitiveness, it remained vulnerable to changes in market conditions due to its heavy reliance on business with Apple and limited success in nurturing new clients other than smartphone-makers.

The company expects to have booked a group net loss for the fifth straight year in fiscal 2018.

Among other Japanese display-makers, Sharp Corp. sought help from Taiwan’s Hon Hai Precision Industry Co. in 2016, becoming the first major Japanese electronics maker to be acquired by a foreign company.

Japan Display’s capital injection and refinancing plan still needs to be approved by more than two-thirds of its shareholders at their meeting on June 18, the company said.

“Our products have been dependent too much on smartphones, and recently shrinking demand in them hit our business,” Japan Display President Yoshiyuki Tsukizaki said at a Tokyo news conference.

Tsukizaki said he aims to build new factories in China to produce OLED displays and will consider closing some production based in Japan.

He said no decisions have been made on reviewing its management team.

INCJ’s holdings in Japan Display will eventually sink to 12.7 percent from the current 25.3 percent.