Shareholders of Japan Display Inc. gave approval Friday for the embattled company to receive a bailout from a Hong Kong fund and others, but criticized the display-maker over its Chinese sponsor’s withdrawal from the rescue plan announced the previous day.
Minoru Kikuoka, chief financial officer of the key Apple Inc. supplier, offered an apology at an extraordinary shareholders meeting in Tokyo for “causing confusion” over the departure of China’s Harvest Tech Investment Management Co., which further increased uncertainty over the firm’s business continuity.
Japan Display had agreed to receive a capital injection of up to ¥80 billion ($742 million) from a consortium of Harvest Tech and Hong Kong’s Oasis Management Co.
Harvest Tech was supposed to provide about ¥60 billion to the Japanese company. But on Thursday, the firm announced that the Chinese fund would withdraw from the plan.
Japan Display said it received a letter from Harvest on Thursday citing a difference of opinion regarding its corporate governance.
“I was surprised by the dropout of the Chinese fund. I might consider selling my stake after hearing the explanation by the board, because the company faces a difficult situation,” said a 46-year-old male shareholder from Chiba Prefecture before the meeting.
“As the management’s policy changes frequently, I think it will be difficult to rebuild the business,” said another male shareholder, 75, from Tokyo.
A 42-year-old female shareholder from Saitama Prefecture said she will support the company “to protect Japan’s industry,” although she has suffered losses due to declines in share value.
Japan Display said Oasis still plans to invest between $150 million and $180 million but that failure to secure the remaining amount of the planned bailout from Harvest or other sponsors could make it difficult for the display-maker to continue operating.
Kikuoka said at a press briefing Thursday there were no concerns about an immediate cash crunch, thanks to loans extended by Japanese government-backed fund INCJ — its biggest shareholder.
The ailing panel-maker is seeking new sponsors while maintaining the current framework of Suwa Investment, a consortium formed by the Chinese fund and Oasis Management.
Meanwhile, a major Japan Display client, which sources said is Apple, intends to double its planned investment to $200 million if Japan Display could find other investors to partially replace Harvest by the end of this year, Japan Display said.
Apple accounted for 60.6 percent of Japan Display’s revenue in the last financial year ended March. Japan Display still owes Apple nearly $900 million for the $1.5 billion cost of building a smartphone screen plant four years ago.
Japan Display was established in 2012 through the merger of the display operations of Sony Corp., Hitachi Ltd. and Toshiba Corp. with support from the government-backed INCJ Ltd.