Japan Display in Talks Over $703 Million Bailout From INCJ

TOKYO—Apple Inc. supplier Japan Display Inc. is in advanced talks to receive a bailout of around ¥ 75 billion ($703 million) from a government-backed fund that is its largest shareholder, people familiar with the matter said.

The plan under discussion calls for Japan Display to receive new financing from Innovation Network Corp. of Japan, the government-backed fund that holds 36% of the display maker, the people said. Among the options under study is issuance of subordinated bonds by Japan Display to INCJ. Japan Display's banks also are considering additional support for the company, they said.

People briefed on the talks cautioned that no final decision has been made and that the details of the support package might change.

Japan Display Chief Executive Mitsuru Homma said Wednesday that the INCJ "is considering financial support to help us grow," without elaborating.

Japan Display, the nation's flagship panel provider and a supplier for Apple's iPhones, has seen its core business slump due to intense price pressure and competition from an alternative display technology— organic light-emitting diode, or OLED, displays—championed by South Korea's Samsung Electronics Co.

The Tokyo display maker on Wednesday said revenue in the July-September quarter fell 25%, and it posted a net loss of ¥ 4.9 billion. Executives said they remained optimistic about the rest of the fiscal year ending March 2017 thanks to demand stemming from Apple's recently introduced iPhone 7 series.

The display maker projected a small operating profit for the full fiscal year, helping to push shares up 11.5% in Tokyo on Thursday. Shares were down slightly in Friday trading.

Japan Display wants to improve its liquid-crystal display technology to compete against OLED displays while trying to set up its own manufacturing lines for mass-producing OLED panels. Both efforts require large investments, and analysts have questioned how the company would finance them.

Sharp Corp., the main domestic rival to Japan Display, received an infusion of funds this year when it was taken over by Foxconn Technology Group of Taiwan.

Write to Takashi Mochizuki at [e-mail] and Atsuko Fukase at [e-mail]

(END) Dow Jones Newswires

November 11, 2016 00:05 ET (05:05 GMT)

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