Japan Dismay

15 April 2019 By Alec Macfarlane

An investor group is buying two thirds of Japan Display for $714 mln, an embarrassingly low price for a former national champion. The company will fall into foreign hands, some of them Chinese, which could raise red flags. Managers have little choice but to pray the deal closes.

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Japan Display said on April 12 it has agreed to a 232 billion yen ($2.1 billion) rescue deal from a consortium of Chinese and Taiwanese investors and state-backed Innovation Network Corporation of Japan.

A vehicle called Suwa Investment will invest up to 80 billion yen into the company through the acquisition of shares and convertible bonds, Japan Display said in a statement.

INCJ, which already holds a stake in the company, will provide Japan Display with a 77 billion yen five-year loan and accept a debt-to-preferred equity swap totaling 75 billion yen.

Suwa will own 49.8 percent of Japan Display following the deal, replacing INCJ as the company’s top shareholder. Suwa’s stake will increase to 65.4 percent after its bonds are converted to equity.

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