* Will use funds to raise stake in Joled to 51 percent
* Aims to reduce dependence on its biggest client Apple
* Japan Display shares hit highest since November 2015
(Adds Japan Display announcement, updates share price)
TOKYO, Dec 21 Japan Display Inc's
state-backed main investor has agreed to provide up to 75
billion yen ($640 million) in aid to the struggling smartphone
display maker, in a publicly funded bailout to help it reduce
its dependence on Apple Inc.
Japan Display's finances have withered on fluctuating demand
for Apple's iPhones, prompting it to request support from its
biggest investor Innovation Network Corp of Japan (INCJ) this
year after a funding crunch saw it take out short-term loans.
Apple's products account for over half of Japan Display's sales.
Under the bailout, INCJ will buy convertible bonds worth 45
billion yen to be issued by Japan Display, the latter said on
Wednesday. INCJ, which has a 36 percent stake in Japan Display,
will also provide 30 billion yen in subordinated loans.
The funds will allow Japan Display to invest in advanced
screens for cars and gaming headsets as growth in the smartphone
The firm will also use part of the funds to hike its stake
in organic light-emitting diode panel maker Joled to 51 percent
from 15 percent by September 2017, improving its position in a
key technology that makes panels thinner and more flexible than
LCD screens and where it lags far behind rivals.
But the bailout of the ailing display maker, with taxpayers'
money, could raise questions about the role of INCJ that was
established in 2009 to promote new and innovative technologies.
The funding follows INCJ's earlier attempts to rescue
Taiwan's Sharp Corp, which was facing a financial
crunch, with the aim to broker a merger between it and Japan
Display. But Sharp was bought by Taiwan's Foxconn, formally
known as Hon Hai Precision Industry.
Japan Display - formed in 2012 by combining the display
units of Hitachi Ltd, Sony Corp and Toshiba
Corp - last month said it was slashing 30 percent of
its workforce to improve profitability.
Shares of Japan Display surged as much as 11 percent to a
more than one-year high earlier in the day after a media report
said INCJ was finalising aid for the display maker. The shares
later shed most of the gains to end up 2.5 percent, while the
broader Nikkei ended down 0.3 percent.
(Reporting by Makiko Yamazaki and Taiga Uranaka; Editing by