Chinese group to postpone Apple supplier Japan Display bailout funding
A Chinese-Taiwanese company is delaying an investment of up to 80 billion yen (US$ 729.33 million) scheduled as part of a rescue agreement for Japan Display, a supplier of Apple Inc as it wishes to reassess the opportunities of the target, the Japanese company said.
The cash-strapped smartphone display manufacturer, struck by Apple’s slowing iPhone revenues and a late move to organic light-emitting diode (OLED) displays, could be jeopardized by a lengthy delay.
By mid-June, the buyer group, which comprises Taiwanese flat screen manufacturer TPK Holding and Chinese equity company Harvest Group, had scheduled to formalize investment choices.
The bailout agreement, announced a month earlier, would enable customers to become the most significant stakeholders of Japan Display with a share of 49.8 percent, replacing the INCJ fund backed by the Japanese government.
But the team notified the company that they would take such measures “after reviewing the opportunities for the business performance of Japan Display,” the firm said on Monday, adding that there was no timeframe for evaluation.
TPK and Harvest did not react to demands for comments by email immediately
A source acquainted with the issue said the economic condition of Japan Display has altered since the agreement was decided, causing the team to reevaluate the company. The source refused to elaborate on the situation shift.
Japan Display has projected it will release its third consecutive year of net losses for the year finished in March as disappointing revenues of Apple’s iPhone XR, the only version with a liquid crystal display (LCD) screen, drowned hopes for a turnaround. The company’s economic outcomes will be announced on Wednesday.
“The buyer group is pressuring Japan Display to sweeten the bid,” said Masayuki Otani, Securities Japan’s principal business officer who is not engaged in the agreement. “It’s a great offer for the company as it receives strong panel techniques, but the cheaper, the better.” Investment by the Chinese company is part of a bailout plan of 232 billion yen (US$ 2.1 billion) in which INCJ will embrace a debt-to-preferred stock exchange of 75 billion yen and extend senior credits of 77 billion yen.
Japan Display said INCJ has said it will not modify the plan to the investment although the ultimate contract will be produced in line with the business choices of the buyer group.
In 2012, Japan Display was created by merging Hitachi Ltd, Toshiba Corp, and Sony Corp’s LCD companies in a government-brokered agreement.