Apple supplier Japan Display agrees to $736 million bailout

Apple supplier Japan Display agrees to $736 million bailout

Japan Display Inc. said it has reached a basic agreement for a funding package of 80 billion yen ($736 million) to 90 billion yen to help it sustain a struggling mobile-screen business that supplies Apple Inc. and other customers.

The money is coming from Ichigo Asset group and the final amount will be determined in January; the Japanese company said in a statement. An unnamed customer, previously reported to be Apple; will put in $200 million in exchange for owning part of the company’s Hakusan plant in central Japan.

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Japan Display fundraising saga has dragged out for more than two years, with the troubled display maker coming close to raising capital at least twice this year. The potential rescuers had included China’s Huawei Technologies Co. and BOE Technology Group Co. in part because of their interest in JDI’s organic light emitting diode technology, but its Chinese rivals have since succeeded in developing their own variants. With JDI’s liabilities exceeding assets by more than 100 billion yen in the most recent quarter, time for a deal is running short.

Ichigo will take an equity stake of 40% to 50%, according to a person familiar with the matter; who asked not to be identified because the details aren’t public. Ichigo Asset Management’s Chief Executive Officer Scott Callon will become co-chairman of JDI as part of the deal; alongside Takahisa Hashimoto, the person said. Minoru Kikuoka will carry on in the position. He is the newly appointed CEO.

Raise Capital or face difficulties

The company announced plans in April to secure 117 billion yen in new funds; but those disintegrated when China’s Harvest Tech Investment Management Co., Cosgrove Global Ltd., Topnotch Corporate Ltd. and Taiwan’s TPK Holding Co. left the rescue plan one after another.

Constituted from the remains of numerous ailing Japanese display makers in 2012; JDI mistimed large investments in LCD capacity; and found itself struggling against abler competition from South Korean and Chinese rivals. Five straight years of losses have sent it in search of a capital infusion from overseas, but the list of potential suitors has steadily dwindled. In September, the company warned that if it’s not able to raise fresh capital it may face difficulties continuing its business.

JDI’s shares closed 5.8% higher on Thursday, after many details of the plan leaked to the media. Of the seven analysts tracked by Bloomberg; four recommend selling the stock. There is only one buy rating.

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