Apple supplier Japan Display said on Friday it has signed a long-awaited deal under which it will receive a JPY 232 billion ($2.1 billion) bailout that will give a Chinese-Taiwanese group a near-majority stake in the firm.
The group which includes Taiwanese flat screen maker TPK Holding and China asset manager Harvest Group, will inject up to JPY 80 billion by buying shares and bonds.
As a result, it will own a 49.8 percent stake and become the largest shareholder in the company in place of the Japanese government-backed INCJ fund, effectively ending the government’s efforts to keep the last remaining domestic display maker out of foreign hands.
INCJ will also join the bailout by accepting a debt-to-equity swap totaling JPY 75 billion and extending senior loans worth JPY 77 billion. It’s stake will fall to 12.7 percent from 25.3 percent after the deal.
The rescue funding comes as a late shift to organic light-emitting diode (OLED) screens and slowing iPhone sales have threatened Japan Display’s survival.
Japan Display expects to post its fifth straight year of net losses in the year ending this month, as disappointing sales of Apple’s iPhone XR, the only model with LCD screens, dashed hopes for a turnaround.
The Apple business accounted for more than half of Japan Display’s revenue over the last four years.
Under the latest deal, Japan Display and the group are planning to launch an OLED panel plant to produce iPhone screens, sources with direct knowledge of the matter previously said.
© Thomson Reuters 2019