Japan Display gets debt relief, says consortium to formalize bailout

Japan Display said on a Chinese-Taiwanese consortium will formalize its decision to invest in it by June 14, after client Apple Inc agreed to wait for money owed and a government-backed fund offered to waive debt.

The deal will unlock a lifeline of up to 80 billion yen ($729 million) for the smartphone screen maker, hit by slowing sales of Apple’s iPhones and a late shift to organic light-emitting diode (OLED) screens.

The consortium, which includes Taiwanese flat screen maker TPK Holding Co and Chinese investment firm Harvest, will replace Japanese government-backed fund INCJ as Japan Display’s biggest shareholder with a 49.8% stake. INCJ’s stake will fall to 12.7% from 25.3%.

The consortium reached a basic agreement on the deal in mid-April but delayed formalizing it to reassess Japan Display’s prospects. The reassessment was prompted by a change in Japan Display’s financial situation, a person with direct knowledge of the matter told Reuters at the time.

Soon after the delay, INCJ offered to forgive 44.7 billion yen in debt in return for Japan Display’s 27.2% stake in OLED panel maker JOLED, Japan Display said.

Reuters could not reach INCJ for immediate comment.

Japan Display also on said “a client” to which it owed money had agreed to halving the pace of repayment for two years.

People with direct knowledge of the matter previously told Reuters that Apple fronted most of the $1.5 billion cost of building a Japan Display plant four years ago, with the Japanese firm agreeing to repay Apple with a percentage of screen sales.

    A Japan Display executive in April said the firm still owed its client about 100 billion yen, without naming Apple.