Japan Display confirms new financing deal with TPK investor consortium

Japan Display (JDI) has confirmed a new financing deal with Chinese and Taiwanese investors in order to improve its competitiveness on the smartphone displays market. The deal includes a partnership with Taiwan-based display maker TPK to strengthen its LCD business as well as funds from new and existing investors to develop in the emerging OLED market and new sectors such as automotive displays. 

The company said the funds are needed to ensure the business can continue, as it is expected to report a loss for the fiscal year to March 2019. The increasing competition from Chinese display makers, the industry shift to OLED and the stagnating smartphone market have all taken their toll on the Japanese company set up in 2012 by Sony and other Japanese investors. 

The new investor is the Suwa Consortium, made up of TPK, Chinese private equity investor Harvest Tech and the investment firms Topnotch and Cosgrove, controlled by Taiwan’s Tsai family, founder of the Fubon financial. The consortium has agreed to buy JPY 42 billion in new shares in JDI, as well as JPY 18 billion in convertible bonds, with an option for a further JPY 20 billion of bonds if needed by the company. 

JDI said JPY 32 billion of the proceeds will go to capex for the OLED business and starting new business areas, JPY 9.2 billion is planned for R&D and the remainder is working capital. The financing is expected to be completed in June, until which it has a bridge loan and financing commitments from its existing shareholder INCJ. The latter is equal to up to JPY 152 billion, divided roughly equally between long-term seniors loans and convertible preferred stock. 

After the new capital injection, INCJ’s stake in the company will drop to 12.7 percent from 25.3 percent, while the Suwa consortium will hold 49.8 percent. JDI’s total capital will increase by JPY 117 billion.