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Taiwan's TPK withdraws from Japan Display bailout consortium

Ailing panel maker's fate uncertain as Fubon Group likely to follow suit

Loss of the Taiwanese investor will deal a serious blow to efforts at saving the struggling Japanese maker. (Photo by Karina Noka)

TOKYO -- Taiwanese electronics component maker TPK Holding, a member of the Taiwan-China consortium that planned to offer up to 80 billion yen ($736.8 million) in financial aid to Japan Display, has notified the troubled company that it would pull out of the consortium, Japan Display announced on Monday.

The consortium consists of TPK Holding, Taiwanese financial group Fubon Group and China's Harvest Fund Management. TPK and Fubon were planning to contribute nearly 40 billion yen to the bailout, with TPK as one of the biggest investors on a voting rights basis.

It is likely that Fubon will withdraw from the deal too, as it had been working closely with TPK in the bailout, sources say. Fubon was supposed to notify Japan Display, also known as JDI, by June 14 about its official participation in the bailout, but the Japanese maker has yet to receive word.

JDI also said on Monday that Harvest Fund Management, which had planned to provide nearly 40 billion yen, had postponed its official decision to June 27 from June 14.

The Japanese maker said that it is now in talks with Oasis Management to make up for the loss of TPK, which planned to invest 25.1 billion yen. The Hong Kong-based hedge fund is thinking of offering JDI about 16 billion yen ($150 million).

JDI said other domestic and overseas investor groups have proposed bailouts as well. Sources say that JDI is in talks with Singapore-based investment fund Effissimo Capital Management and a Japanese computer peripheral equipment maker.

In late May, the bailout appeared to be a sure thing. JDI told investors that it had secured additional funding from top shareholder INCJ, a Japanese public-private fund, as well as more leeway for repaying money borrowed from its top client, Apple.

But the deal took a turn for the worse in May when TPK Chairman Michael Chiang Chao-juei told Nikkei that there was some disagreement with JDI and that it would withdraw if talks broke down.

JDI's earnings deteriorated more than expected since the consortium was formed in April, which could have influenced TPK's decision to pull out. Sources also suggested that there was a leadership dispute between TPK and Harvest Fund.

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