Japan Display Said Close to Winning $886 Million INCJ Bailoutby , , and
Company may sell preferred shares to INCJ to avoid dilution
A joint announcement is expected as early as this month
Japan Display Inc. may issue preferred shares to raise as much as 100 billion yen ($886 million) from a government-backed fund, according to people familiar with the matter, a deal that amounts to a bailout of the struggling display maker.
The Tokyo-based supplier of screens to Apple Inc. has explored ways to win a cash injection from Innovation Network Corp. of Japan, its largest shareholder. Both sides are now leaning toward a sale of preferred stock to avoid diluting common stock-owners, the people said. The capital raised would go toward the development of displays for cars and next-generation smartphone screens, according to the people, who asked to not be identified because the discussions are private.
Loss-making Japan Display and rival Sharp Corp. need massive amounts of capital to invest in organic light-emitting diode displays, considered the future standard for iPhones and other mobile devices. Apple is struggling to find enough OLED supply for its new iPhones expected next year, Bloomberg News reported this month. But initial costs for screen suppliers could reach $2 billion, stretching their finances even before they get any firm orders.
Japan Display and INCJ are both looking to announce the deal this month, according to the people. Japan Display may also announce its medium-term business plan at the same time.
The company had also considered issuing junior debt, the people said. Both Japan Display and INCJ declined to comment.