Chinese and Taiwanese Companies To Gain Controlling Stake of JDIby Anton Shilov on April 15, 2019 2:00 PM EST
- Posted in
- Japan Display
A group of investors from China and Taiwan and the Innovation Network Corporation of Japan (INCJ) have signed a memorandum of understanding (MOU) under which the former will invest in Japan Display Inc. (JDI) about $715 million and will become the largest shareholder of the manufacturer. The MOU was signed on Friday and it looks like it will be accepted by all parties.
According to the terms of the MOU, the struggling display maker will get $715 million from China’s Silk Road Fund and Harvest Tech Investment Management, as well as Taiwan’s TPK Holdings and Fubon Financial Holdings. The group, which calls itself Suwa Investment Holdings LLC, will own a 49.82% stake in Japan Display and will become its major shareholder. Meanwhile, INCJ will retain control of a 12.69% stake.
Japan Display was incorporated in 2011 merging LCD production of Sony, Hitachi, and Toshiba, backed by the Japanese government via INCJ. The company was listed on the Tokyo Stock Exchange in 2014. According to its financial reports, JDI has been bleeding money ever since accumulating a huge debt, which is why it needed an injection of capital.
Japan Display’s most important client is Apple, which uses JDI’s displays for iPhones. Meanwhile Apple began to use AMOLED screens for advanced handsets starting from the iPhone X (launched 2017), whereas JDI’s JOLED division yet has to kick off mass production of OLED screens for smarphones. So far, JDI has only landed orders for screens used on Apple Watch devices.
JDI is by far not the only company that is to receive a substantial capital injection by foreign investors. Earlier this decade Foxconn acquired Sharp, then the latter devoured Toshiba’s PC business. Meanwhile, Hisense bought TV business from Toshiba, which also had to sell its NAND flash business to a consortium of investors from abroad.
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- Lenovo to Acquire Controlling Stake of Fujitsu’s PC Business
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Sources: Japan Display, Financial Times, Japan Times, ChannelNewsAsia, Reuters
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Smell This - Monday, April 15, 2019 - link
I know nothing about these transactions, nor their companies or histories, but in most "debt-to-equity swaps" not only are the vultures circling, they have already selected the bones they want to pick clean.
"It is what it is"
wr3zzz - Monday, April 15, 2019 - linkDebt-to-equity swaps are rarely used by vulture investors. Equity has far less legal protections than debt. Most debt-to-equity swaps are for restructuring purpose where debt owners take a hair cut in their investments and existing equity investors getting wiped out. This is not how vultures make their money.
This transaction is called equity injection where the value of the additional equity is negotiated between new and existed equity holders, which could be at a discount or premium, but there is no change in the debt obligations.
Cullinaire - Monday, April 15, 2019 - linkThis being Japan you'd think the govt would step in before allowing their "crown jewel" (maybe a bit optimistic but these are household names) companies to be ripped apart by the Chinese. So the deals probably have a bit more meat than you infer.
Kamus - Tuesday, April 16, 2019 - linkThe Chinese government knows how to exploit capitalism for their benefit. Don't be surprised to later find out that there's government money involved in all of these transactions.
Smell This - Tuesday, April 16, 2019 - linkYou guys are way more up to speed on this than me.
China Silk Road, et al, is effectively saying, "Japan Display is worth 12.69% of $1.43B US." As opposed to 'equity injection' it smells like 'equity dissolution,' or discount/'haircut' as stated.
Suwa Holdings is essentially the 'new' JDI. Whatever is left of the IP, 'goodwill' and JOLED/other businesses is subject to being sold or spun-off. That's all I'm sayin' ... :)
"Japan Display was formed in 2012 by combining the LCD businesses of Hitachi Ltd, Toshiba Corp and Sony Corp in a deal brokered by the government. It went public in March 2014 and was worth more than 400 billion yen then. It is now worth 67 billion yen."
As noted, the last I knew about monitors/displays from 'Hitachi Ltd, Toshiba Corp and Sony Corp' they were making CRTs ...
firstname.lastname@example.org - Friday, April 19, 2019 - linkWow nice man keep doing this. <a href="https://licensenew.com/"> licensenew.com </a>