Japan Display Needs a Break

Japan Display Needs a Break
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​Japan Display’s (6740.JP) largest shareholder Ichigo (2337.JP), a $5.8b asset manager based in Tokyo, has decided to convert 658m Class B preferred shares to common stock that it received in 2020 when it bailed out JDI.  This will increase Ichigo’s share of the common from 49.28% to 56.7%, and while Ichigo still has 1.02b Class A shares and 5,540 Class E shares, the Class B shares were the only preferred that had voting rights.  JDI has also borrowed 28b¥ from Ichigo.  While Ichigo has been JDI’s largest shareholder before the conversion, the increase in common shares held by Ichigo, whose CEO is also the CEOI of JDI, will reduce the company’s free float ratio below 35%, which would force JDI to lose its listing on the Tokyo Exchange, however there is an exception that allows the violation to be sustained for 5 years if the 3rd party owns the shares to support a company’s business in a turnaround situation, which this would certainly be the case.  JDI will file for the exception after its fiscal year ends in June, which we expect will be approved.