Vertical Divider
​Takeover of JDI by Suwa Continues
September 09, 2019
 
Japan Display (JDI) has been working toward refinancing the company, trying to find a solution using either existing shareholders, new investors, or both.  This has not been an easy path for the company and the sense of desperation looms over each announcement, but JDI continues on with their quest, and has issued an update that gives some perspective on the state of their negotiations. 

  • Shareholders Meeting – September 29 (Tokyo) – Revised shareholder meeting date and agenda
    •  Amendments to Articles of Incorporation
    • Issue new shares and Bonds with SAR
    • Issue new class shares
    • Election of two new Directors – As part of the expected funding, five Directors will be nominated by the new investors and four by the company to replace a number of ‘retiring’ Board members and Executive Officers.  If all goes according to the latest plan, the majority of the Board will be nominated by the outside investors.

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  • Japan  Display will cede all shares of JOLEDto INCJ as repayment for interim loans
    • JDI owns 579,000 JOLED shares currently
    • All shares will be transferred to INCJ by August 2020 (possibly sooner)
    • Transfer value of 46.32b¥ (~$438m US$)
    • JDI will record profit of ~20b¥ ~$190m US) in 2020 or 2021.
 
  • The INCJ will provide a secured 5-year loan with no pre-payment penalty to JDI 50b¥ (~$473m US$)
 
  • JDI will issue to INCJ new Class A  Preferred shares – a change from an earlier proposal to issue bonds with Stock Acquisition Rights which would have led to instant dilution, which is not the case with the preferred shares, whose exercise period is delayed for one year.
    • 1.02b shares
    • Capital raised: 102b¥ (~$964.5m US$)
    • INCJ agrees not to sell the pfd. Shares to any JDI competitor or holder of more than 20% of JDI shares
    • Capital received (101.6b¥) to be used to pay down short-term loans and 1st series Bonds
    • Top Shareholders in JDI before and after the deal, which includes other investors and exercise of SARs on 2nd & 3rd Bond series + put options on preferred shares:

 Table 1: JDI Shareholders Pre and Post Funding
Source: Japan Display
​Japan Display has little negotiating room in the negotiations with either INCJ or outside investors, and Apple, has been the most lenient toward JDI, given a substantial pre-payment balance (~900m) that it would likely lose should JDI fail.