TOKYO -- Japan Display faced exasperated shareholders at a chaotic meeting Friday who wanted know how the company plans to move forward after China's Harvest Tech Investment Management decided to rescind a bailout for the embattled Apple supplier.
In a move highlighting the deep uncertainty facing the company, shareholders approved the company's plan to issue 80 billion yen ($742 million) in new shares that yet to have takers. The company plans to continue negotiating with China's Haverst.
The liquid crystal display maker known as JDI now aims to secure $430 million in rescue funds by October or November. The sum includes between $150 million and $180 million to be raised from Oasis. Apple is weighing an increase of its portion to $200 million from $100 million.
Many shareholders were visibly angry at the manufacturer's disastrous handling of the bailout plan.
"Why do we have to beg for assistance from a sponsor that keeps changing its mind?" one asked. "It is humiliating."
Another shareholder was enraged by what he saw as management incompetence. "Executives should obviously give up their pay," the shareholder said.
Shareholders also approved the appointment of a new president, Minoru Kikuoka, who apologized to shareholders for the confusion.
JDI announced in August that it signed a deal with Harvest and Hong Kong's Oasis Management for an 80 billion yen rescue package. Harvest was to contribute 63 billion yen, including 10 billion yen that was to come from Apple, a JDI client.
On Thursday, the display company said it received notice that the Chinese fund was backing out due to "fundamental differences in thinking about the governance of JDI." Harvest apparently had issues with JDI's process of selecting directors.
JDI's deteriorating finances led the company to post 6 billion yen in negative operating cash flow in the year ended in March. Its negative networth exceeded 79 billion yen at the end of June.
The company is unlikely to have cash flow problems for the time being, thanks to additional infusions from Apple and Innovation Network Corp. of Japan, the top shareholder. But if the rescue package from the consortium of backers is not secured, "it could potentially lead to a court-mediate process," a JDI insider said.
"A court-led process will lighten the debt load, and it will be easier to find new investors," said an attorney knowledgeable about corporate bankruptcies.
The trade and economy ministry believe the display panel maker has lost its technological edge over competitors. The government now plans to wait and see if other white knights will appear.