A Taiwanese company that is part of a consortium planning to offer bailout funds to struggling Japan Display Inc. has decided to forgo providing the funds, sources said Saturday.
The move deepens uncertainty over whether the maker of smartphone screens and Apple Inc. supplier can be rebuilt.
The company was awaiting an investment of up to ¥80 billion ($737 million) from the Chinese-Taiwanese consortium starting later this month. But the consortium, which groups China's Harvest Tech Investment Management Co., Taiwanese panel-maker TPK Holding Co. and a Taiwanese fund, did not give notice by Friday, as had been expected, that it had formally decided on the capital injection. It was not immediately clear which entity decided to back out of the plan.
Japan Display incurred a group net loss for the fifth straight year in fiscal 2018 through March, posting red ink of ¥109.43 billion on sales of ¥636.66 billion, down 11.3 percent from a year earlier, because of falling demand from its main client Apple.
Japan Display has started negotiations to secure alternative investors, according to the sources.
The manufacturer was established in 2012 following the merger of the display operations of Sony Corp., Hitachi Ltd. and Toshiba Corp. with support from state-backed fund INCJ Ltd.
It struck a bailout deal in April this year with the consortium, under which the ¥80 billion was to be invested through the issuance of common shares and convertible bonds with share acquisition rights.
As part of its restructuring, Japan Display has decided to cut 1,200 jobs, a quarter of its total workforce in Japan, and suspend operations at its plant in Ishikawa Prefecture from July to September in an effort to lower fixed costs.