Japan Display Says It Has Lined up $828 Million Financing

TOKYO—A financially strapped Japanese supplier of displays for Apple Inc. AAPL 0.25% ’s iPhone 11 said it has lined up financing of up to ¥90 billion ($828 million) from an investment fund with U.S. connections.

Japan Display Inc. 6740 +0.00% said Thursday that it has agreed on the basic outline of an investment by a Singapore arm of Tokyo-based Ichigo Asset Management Ltd., which manages funds from U.S. university endowments and other investors.

The display maker also said that a major customer was ready to pitch in $200 million for the rescue. People involved in the deal identified that company as Apple.

Ichigo Asset Management’s chief executive, Scott Callon, is an American corporate-governance expert who wrote a book about the breakdown of Japan’s high-technology industrial policy. He is expected to assume a significant role at Japan Display if the investment goes through.

Earlier this year, Japan Display said it was preparing to receive rescue funds from a consortium known as Suwa, which at the time included investors from China and Taiwan. The key players in the group later pulled out of the deal, but Japan Display’s chief executive, Minoru Kikuoka, said negotiations continue. He said the Ichigo investment would proceed only if talks with Suwa were to fall through.

People involved in the talks said Thursday’s announcement was meant to signal that Japan Display had all but given up on Suwa and was now focusing on the Ichigo deal.

The rescue funding would stabilize Apple’s supply of liquid-crystal displays for such models as the iPhone 11. The company is also preparing to sell a lower-cost phone next year that would use LCD panels, according to people familiar with the plans.

Apple has switched to organic light-emitting diode, or OLED, panels for some new iPhone models. Japan Display doesn’t yet make OLED panels for smartphones, although it is supplying smaller OLED displays for the Apple Watch.

The display maker, which was created in 2012 through a government-backed merger of the display units of three Japanese electronics companies, has struggled in recent years owing to excess supply of display panels in the industry and Apple’s switch to OLED panels.

Japan Display said Ichigo is willing to invest ¥80 billion to ¥90 billion ($737 million to $828 million) in the company and that the infusion could be completed by March.

A person involved in the deal said half of Ichigo’s investment would be in common shares at ¥50 a share, with the remainder coming through purchases of Japan Display bonds that could be converted into stock.

Ichigo would become Japan Display’s top shareholder but hold less than 50%, this person said.

Japan Display shares rose ¥4 to ¥73 in Tokyo trading Thursday after the company confirmed the outline of the Ichigo investment plan.

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