Notice Regarding Resolution of Board of Directors Relating to Issuance of Shares to be Offered and Secondary Offering of Shares

Transcription

1 February 14, 2014 Company: Representative: Contact: Japan Display Inc. Shuichi Otsuka, President and CEO (Code number: 6740, Tokyo Stock Exchange) Yasuhiro Nishi, Executive Officer and Chief Financial Officer (Tel: ) Notice Regarding Resolution of Board of Directors Relating to Issuance of Shares to be Offered and Secondary Offering of Shares Japan Display Inc. (the Company ) hereby announces that its board of directors has resolved matters relating to the issuance of its shares and a secondary offering of shares associated with the listing of its shares of common stock on the Tokyo Stock Exchange at a meeting held on February 14, 2014, as set forth below. 1. Issuance of shares to be offered by way of public offerings (1) Class and number of shares to be offered (2) Amount to be paid for shares to be offered (3) Payment date March 18, 2014 (Tue) (4) Matters relating to stated capital and additional capital reserves to be increased 140,000,000 shares of common stock of the Company With regard to the number of shares to be offered described above, the number of shares to be offered by way of an offering to be made in Japan (the Japanese Offering ) is planned to be 77,000,000 shares, and the number of shares to be offered by way of an offering to be made outside of Japan (with the offering in the United States restricted to sales to qualified institutional buyers under Rule 144A of the United States Securities Act of 1933) (the International Offering ) is planned to be 63,000,000 shares. However, the final breakdown shall be determined on the pricing date (March 10, 2014) within the number of shares to be offered described above by taking into account market demand and other conditions, and shall be determined at the discretion of the Representative Director of the Company. The number of shares to be offered may be changed at the meeting of the board of directors to be held on March 3, Undetermined. (To be determined at the meeting of the board of directors to be held on March 3, 2014.) The amount of stated capital to be increased shall be half of the maximum increase amount of stated capital, as calculated in accordance with the provisions of Article 14, Paragraph 1 of the Rules of Account Settlement of Corporations based on the subscription price 1

2 to be determined on March 10, 2014 with any fraction less than one yen resulting from the calculation being rounded up to the nearest one yen. The amount of additional capital reserves to be increased shall be the amount obtained by subtracting the said amount of stated capital to be increased from the maximum amount of increase of stated capital. (5) Method of offering The Japanese Offering and the International Offering shall be made simultaneously. (i) (ii) Japanese Offering: The issuance of shares to be offered shall be a public offering at the issue price, and 13 Japanese underwriters shall underwrite and jointly purchase the aggregate number of shares to be offered by way of the Japanese Offering at the subscription price. The subscription price will be determined at the same time as the determination of the issue price, and if the subscription price is less than the amount to be paid, this issuance of shares to be offered and the Japanese Offering shall be cancelled. If the Japanese Offering is cancelled, the International Offering shall also be cancelled. International Offering: In the International Offering, the aggregate number of shares shall be severally and not jointly purchased at the subscription price by several international underwriters, acting as the international joint lead underwriters and joint bookrunners. If the International Offering is cancelled, the Japanese Offering shall also be cancelled. (iii) The Japanese joint lead managers for the Japanese Offering, the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters mentioned in 2. below, as well as the secondary offering by way of over-allotment mentioned in 3. Below, shall be three of the Japanese Underwriters, and the ascertainment and allocation of market demand and other conditions for the individuals and business corporations that are investors which may acquire shares of common stock of the Company shall be jointly made by two of the Japanese underwriters. The ascertainment and allocation of market demand and other conditions for the institutional investors shall be jointly made by three of the Japanese underwriters. (iv) The joint global coordinators for the Japanese Offering, the International Offering, the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters mentioned in 2. Below, as well as the secondary offering by way of overallotment mentioned in 3. Below, shall be three of the underwriters. (6) Issue price Undetermined. (To be determined on March 10, 2014, after indicating provisional conditions at a price more than the amount to be paid for shares to be offered after the determination of the amount to be paid for shares to be offered and taking into account market demand and other conditions based on such provisional conditions.) 2

3 (7) Subscription period (in Japanese Offering) (8) Subscription unit 100 shares (9) Share delivery date March 19, 2014 (Wed) From March 11, 2014 (Tue) to March 14, 2014 (Fri) (10) Except for the matters set out above, the matters necessary for the determination by the board of directors relating to this issuance of shares to be offered shall be determined at a meeting of the board of directors to be held in the future. (11) With regard to the matters set out above, the Japanese Offering shall be subject to the registration taking effect under the Financial Instruments and Exchange Act of Japan. If the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters mentioned in 2. below is cancelled, this issuance of shares to be offered shall also be cancelled. 2. Secondary offerings of shares by way of purchase and subscription by underwriters (1) Class and number of shares to be offered (2) Sellers and number of shares to be offered 213,900,000 shares of common stock of the Company With regard to the number of shares to be offered described above, the number of shares to be offered by way of a secondary offering to be made in Japan (the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters ) is planned to be 117,645,000 shares, and the number of shares to be offered by way of a secondary offering to be made outside of Japan (with the secondary offering in the United States restricted to sales to qualified institutional buyers under Rule 144A of the United States Securities Act of 1933) (the International Secondary Offering ) is planned to be 96,255,000 shares. However, the final breakdown shall be determined on the pricing date (March 10, 2014) within the number of shares to be offered described above by taking into account market demand and other conditions, and shall be determined at the discretion of the Representative Director of the Company. The number of shares to be offered may be changed at the meeting of the board of directors to be held on March 3, (i) (ii) Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters Innovation Network Corporation of Japan Sony Corporation Toshiba Corporation Hitachi, Ltd. International Secondary Offering Innovation Network Corporation of Japan 89,745,000 shares 9,300,000 shares 9,300,000 shares 9,300,000 shares 96,255,000 shares (3) Method of secondary offering The Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters and the International Secondary Offering shall be made simultaneously. (i) Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters: 3

4 (ii) The secondary offering of shares shall be a public secondary offering at the selling price, and 13 Japanese underwriters shall underwrite and jointly purchase the aggregate number of shares to be offered in Japan at the subscription price. If the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters is cancelled, the International Secondary Offering shall also be cancelled. International Secondary Offering: In the International Secondary Offering, the aggregate number of shares shall be severally and not jointly purchased at the subscription price by several international underwriters, acting as the international joint lead underwriters and joint bookrunners. If the International Secondary Offering is cancelled, the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters shall also be cancelled. (4) Selling price Undetermined. (The selling price shall be the same as the issue price ) (5) Subscription period The subscription period shall be the same as the subscription period (6) Subscription unit The subscription unit shall be the same as the subscription unit (7) Share delivery date The share delivery date shall be the same as the share delivery date (8) Except for the matters set out above, the matters necessary for the approval of the board of directors relating to this secondary offering of shares by way of purchase and subscription by underwriters shall be determined at a meeting of the board of directors to be held in the future. (9) With regard to the matters set out above, the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters shall be subject to the registration taking effect under the Financial Instruments and Exchange Act of Japan. If the issuance of shares to be offered by way of public offering mentioned in 1. above is cancelled, this secondary offering by way of purchase and subscription by the underwriters shall also be cancelled. 3. Secondary offering of shares by way of over-allotment (1) Class and number of shares to be offered (2) Seller and number of shares to be offered 18,000,000 shares of common stock of the Company. (The number of shares mentioned above is the maximum number of shares to be sold. The above number may decrease, or this secondary offering by way of over-allotment itself may be cancelled, depending on market demand and other conditions. Furthermore, the number of shares to be sold shall be determined on March 10, 2014, taking into account market demand and other conditions.) One of the Japanese underwriters 18,000,000 shares (maximum number) (3) Method of offering Public secondary offering in Japan at the selling price. (4) Selling price Undetermined. (The selling price shall be the same as the issue price ) 4

5 (5) Subscription period The subscription period shall be the same as the subscription period (6) Subscription unit The subscription unit shall be the same as the subscription unit (7) Share delivery date The share delivery date shall be the same as the share delivery date (8) Except for the matters set out above, the matters necessary for the approval of the board of directors relating to this secondary offering of shares by way of over-allotment shall be determined at a meeting of the board of directors to be held in the future. (9) The matters set out above shall be subject to the registration taking effect under the Financial Instruments and Exchange Act of Japan. If the Japanese Offering mentioned in 1. above or the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters mentioned in 2. above is cancelled, this secondary offering by way of over-allotment shall also be cancelled. 4. Issuance of shares to be offered by way of third-party allotment (1) Class and number of shares to be offered (2) Amount to be paid for shares to be offered (3) Subscription date March 27, 2014 (Thu) (4) Payment date March 28, 2014 (Fri) (5) Matters relating to stated capital and additional capital reserves to be increased 18,000,000 shares of common stock of the Company Undetermined. (The amount to be paid shall be the same as the amount to be paid for shares to be offered ) The amount of stated capital to be increased shall be half of the maximum increased amount of stated capital, as calculated in accordance with the provisions of Article 14, Paragraph 1 of the Rules of Account Settlement of Corporations based on the subscription price to be determined on March 10, 2014, with any fraction less than one yen resulting from the calculation being rounded up to the nearest one yen. The amount of any additional capital reserves to be increased shall be the amount obtainable by subtracting the said amount of stated capital to be increased from the maximum amount of increase of stated capital. (6) Method of allotment To be allotted to one of the Japanese underwriters. If the allotment price is less than the amount to be paid for the shares to be offered, this issuance of shares to be offered by way of third-party allotment shall be cancelled. (7) Allotment price Undetermined. (The allotment price shall be the same as the subscription price of shares to be offered ) (8) Subscription unit The subscription unit shall be the same as the subscription unit (9) Shares not subscribed for within the subscription period mentioned above shall not be issued. (10) Except for the matters set out above, the matters necessary for the determination by the board of directors relating to this issuance of shares to be offered by way of third-party allotment shall be determined at a meeting of the board of directors to be held in the future. (11) If the secondary offering by way of over-allotment mentioned in 3. above is cancelled, this issuance of shares to be offered by way of third-party allotment shall also be cancelled. 5

6 Reference 1. Summary of issuance of shares to be offered by way of public offering and secondary offering of shares (1) Number of shares to be offered (i) Number of shares to be offered (ii) Number of shares to be offered Common stock Common stock 140,000,000 shares (77,000,000 shares for the Japanese Offering and 63,000,000 shares for the International Offering; The final breakdown shall be determined on the pricing date within the number of shares to be offered described above by taking into account market demand and other conditions.) 213,900,000 shares for the secondary offering by way of purchase and subscription by underwriters (117,645,000 shares for the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters and 96,255,000 shares for the International Secondary Offering; The final breakdown shall be determined on the pricing date within the number of shares to be offered described above by taking into account market demand and other conditions.) 18,000,000 shares for the secondary offering by way of over-allotment (*) (2) Market demand reporting period From March 4, 2014 (Tue) through March 7, 2014 (Fri) (3) Pricing date March 10, 2014 (Mon) (4) Subscription period (in Japanese Offering) (5) Payment date March 18, 2014 (Tue) (6) Share delivery date March 19, 2014 (Wed) (The issue price and the selling price shall be determined at a price equal to or more than the amount to be paid for the shares to be offered by taking into account market demand and other conditions based on the provisional conditions. From March 11, 2014 (Tue) through March 14, 2014 (Fri) (*) The secondary offering by way of the over-allotment mentioned above is a secondary offering in Japan to be made by one of the Japanese underwriters in conjunction with the Japanese Offering and the Japanese Secondary Offering by way of Purchase and Subscription by the Underwriters taking into account market demand for the offerings and other conditions. Accordingly, the number of shares in the secondary offering by way of the over-allotment mentioned above indicates the maximum number of shares to be sold, and depending on market demand and other conditions such number may decrease, or the over-allotment may be cancelled. The shares of common stock of the Company subject to the secondary offering by way of over-allotment are the shares to be borrowed by the Japanese underwriter from a shareholder of the Company, Innovation Network Corporation of Japan (the Lender ) for the purpose of the secondary offering by way of overallotment. In connection with this, the board of directors of the Company has resolved, at the meeting held on February 14, 2014, that the Company will issue 18,000,000 shares of its common stock in Japan by way 6

7 of third-party allotment to the Japanese underwriter (the Third-Party Allotment ). Furthermore, the Japanese underwriter may, in consultation with the other Japanese joint lead managers, also purchase shares of common stock of the Company on the Tokyo Stock Exchange, up to the number of shares to be offered in the secondary offering by way of over-allotment (the Syndicate Cover Transactions ) in order to return the shares to be borrowed from the Lender. Such Syndicate Cover Transactions would be made during the period beginning on March 19, 2014 and ending on March 20, 2014 (the Syndicate Cover Transaction Period ). The Japanese underwriter plans not to accept the allotment of the number of shares equal to the shares purchased through the Syndicate Cover Transactions mentioned above. Accordingly, all or a part of the shares to be allotted under the Third-Party Allotment may not be subscribed for, which may result in a decrease in the number of shares planned to be issued under the Third-Party Allotment, or in the cancellation of the entire issuance due to forfeiture. During the Syndicate Cover Transaction Period, the Japanese underwriter may, in consultation with the other Japanese joint lead managers, elect to not conduct any Syndicate Cover Transactions or may terminate Syndicate Cover Transactions before the number of shares purchased through such transactions reaches the maximum number of shares offered in the secondary offering by way of over-allotment. 2. Change in the total number of issued shares as a result of this issuance of shares to be offered Total number of issued shares at present: Increase in number of shares as a result of the public offering: Increase in number of shares as a result of the Third- Party Allotment: 461,387,900 shares 140,000,000 shares 18,000,000 shares (maximum number) Total number of issued shares after the increase: 619,387,900 shares (maximum number) 3. Use of proceeds from capital increase The net approximate amount raised from the issuance of shares to be offered by way of this public offering (the net approximate amount of 82,374 million yen from the Japanese Offering and the net approximate amount of 67,390 million yen from the International Offering) (*) is scheduled to be entirely applied to capital investment in the small- to medium-sized display business. Specifically, in order to respond to the increase in demand for LPTS LCDs, in addition to the investment of 151,831 million yen in expanding the J1 line at the Mobara Plant (Note 1) to be executed in the fiscal year ending March 2014, with respect to the net approximate amount described above, 33,800 million yen is scheduled to be applied to the investment in expansion at the J1 line at the Mobara Plant to increase its monthly production capacity to 50,000 sheets and 3,200 million yen is scheduled to be applied to investment in expansion at the D2 line at the Nomi Plant of our Ishikawa Site to increase its monthly production capacity to 25,500 sheets in the fiscal year ending March 2015 (Note 2). Further, in the fiscal year ending March 2015, 17,000 million yen is scheduled to be applied to investment in production facilities and inspection equipment in the module process in order to promptly respond to demand in the mid-priced smartphone market, in which growth is expected mainly in China, and to new product development needs of lead customers, 12,800 million yen is scheduled to be applied to investment in a pilot line of organic EL displays at the Ishikawa Site (monthly production of 4,000 sheets), and 10,200 million yen is scheduled to be applied to investment in research and development aimed at responding to future technical innovation. In addition, in the fiscal year ending March 2015, 12,500 million yen at the Mobara Plant, 9,000 million yen at the Ishikawa Site, 5,000 million yen at the Higashiura Plant, 2,500 7

8 million yen at the Tottori Plant and 2,000 million yen at the Fukaya Plant are scheduled to be applied to investment in development and renewal of photo masks (Note 3) and molds adjusted to new products of our customers, and 1,800 million yen in the headquarters and 500 million yen in other business locations are scheduled to be applied to other investments including investment in IT. The remaining amount is scheduled to be applied to the expansion of production capacity for the purpose of growing the business of the Company group and to capital expenditure, investment in research and development and other matters in order to meet the need for technical innovation in the fiscal year ending March used. The Company will manage the funds by using financial instruments with high stability until the funds are While the maximum net approximate amount of 19,354 million yen (*) from the issuance of shares to be offered by way of this third-party allotment is scheduled to be applied to capital investment and investment in research and development in the fiscal year ending March 2016, the Company will manage the funds by using financial instruments with high stability until the specific financial needs arise and the time of payment is determined. * These amounts are estimates calculated based on a nominal issue price of 1,10 at the time of filing of the security registration statement. Note: 1. J1 line at the Mobara Plant: an LTPS line to manufacture glass substrate for LCD in the 6th generation (glass size: 1500 mm x 1850 mm) at the Mobara Plant * LTPS line = Line adopting low temperature poly-silicon TFT technology 2. D2 line Nomi Plant of the Ishikawa Site: an LTPS line to manufacture glass substrate for LCD in the 5.5th generation (glass size: 1300 mm x 1500 mm) at the Nomi Plant 3. Photo mask: a substrate for circular patterns used in the production process of LCD. 4. Distribution of profit to shareholders (1) Basic policy for the distribution of profit The Company considers returning profit to our shareholders to be one of our key management goals. However, at present, our basic policy is to place a priority on retaining internal reserves rather than paying dividends, and in doing so seek to increase capital and secure investment capacity and financial flexibility in order to build a stronger financial foundation for future growth. In the future, the Company plans to review our basic policy for returning profit to our shareholders, including paying dividends, depending on the financial needs for growth investment and financial conditions. The Company has not paid dividends in the current fiscal year on the view that we need investment in research and development and capital investment in production lines. (2) Use of internal reserves The Company plans to effectively use our internal reserves as funds to achieve financial strength for longterm stability and to achieve business expansion and development. (3) Specific measures for increasing distribution of profit to shareholders in the future In the future, the Company intends to return profit to our shareholders upon reviewing our basic policy for returning profit to our shareholders, which includes paying dividends according to funding requirements for growth investment and financial conditions, but the Company has not yet determined any specific measures at the present time. 8

9 (4) Dividend distribution in the past three fiscal years March 2011 March 2012 March 2013 Net income (loss) per share (5,138.90) (17.95) (55.16) Dividends per share (Interim dividend per share) Actual dividends ratio 0% 0% 0% Return on net assets Dividends to net assets ratio Note: 1. Net income (loss) per share is calculated based on the average number of shares of our common stock outstanding during the relevant period. 2. Return on net assets is calculated by dividing net income for the relevant period by the shareholder s equity (the average figure from the beginning of the relevant period and the end of the relevant period). Dividends to net assets ratio is not indicated, since no dividend was distributed during the relevant three fiscal years. 3. From the fiscal year ending March 2012, the Company adopted the Accounting Standards for Net Income per Share (Corporate Accounting Standards No. 2 of June 30, 2010), the Net Income per Share Accounting Standards Guideline (Corporate Accounting Standards Applications Guideline No. 4 published on June 30, 2010), and the Practical Solution on Accounting for Net Income per Share (Practical Issues Task Force No. 9 of June 30, 2010). While the Company implemented a share split on January 28, 2014 in which each share was split into 100 shares, the Company has calculated the above net income per share and net loss per share on the premise that the share split was implemented at the beginning of the fiscal year ending March The Company implemented a share split on January 28, 2014 in which each share was split into 100 shares. The following reference information about the index change per share is calculated on the premise that if the share split were implemented at the beginning of the fiscal year ending March 2011 based on the notice from the Tokyo Stock Exchange Regulation to underwriting institutions entitled Points in Preparing Securities Report for Initial Listing Application (Part I) (TSE Listing Examination No. 133 of August 21, 2012). The figures for the fiscal year ended March 2011 (as well as the figures for dividends per share of each of the fiscal years) have not been audited by KPMG AZSA LLC. Net income (loss) per share Dividends per share (Interim dividend per share) March 2011 March 2012 March 2013 (51.39) (17.95) (55.16) 9

10 5. Return on net assets for each fiscal year are not indicated, since net loss was recorded for each fiscal year. 6. The Company implemented a merger on April 1, 2013 of Japan Display Inc. (the Former JDI ), Japan Display Central Inc., Japan Display West Inc., and Japan Display East Products Inc. with the Company as the surviving company and on the same day changed the trade name from Japan Display East Inc. to Japan Display Inc. The figures above are based on the dividend distribution, etc. of Japan Display East Inc. before the merger, and not the figures of the Former JDI. 5. Lock-up In connection with the above 1. Issuance of shares to be offered by way of public offering, 2. Secondary offering of shares by way of purchase and subscription by underwriters and 3. Secondary offering by way of over-allotment, the shareholders of the Company (the Innovation Network Corporation of Japan, Sony Corporation, Toshiba Corporation, and Hitachi, Ltd.) will provide a written promise dated March 10, 2014 to the joint global coordinators stating that during the period beginning on the execution date of the underwriting agreements and ending on September 14, 2014 (the 180th day from and including March 19, 2014 (Wednesday)) (inclusive) (the Lock-up Period ) and without the prior written consent of the joint global coordinators, none of them will sell or otherwise dispose of the shares of common stock of the Company (except for, but not limited to, the lease of those shares for the purpose of the above 2. Secondary offering of shares by way of purchase and subscription by underwriters or 3. Secondary offering by way of over-allotment ). The Company will provide a written promise dated March 10, 2014 to the joint global coordinators stating that during the Lock-up Period and without the prior written consent of the joint global coordinators, the Company will not issue any shares of common stock of the Company or any securities convertible into or exchangeable for shares of common stock of the Company, or issue or otherwise provide any securities that are granted the right to acquire or receive shares of common stock of the Company (except for, but not limited to, the issuance of shares to be offered by way of public offering as mentioned in 1. above, the Third-Party Allotment, and the share split). The joint global coordinators have the right to terminate all or part of those promises at their discretion even during the Lock-up Period. 6. Basic policy of allocation The underwriters may sell to investors that did not provide an indication of interest when taking into account the Tokyo Stock Exchange s listing requirements related minimum shareholder and liquidity requirements. Each of the underwriters, keeping in mind to sell the shares fairly and impartially, intends to sell the shares according to their basic policies concerning allocation, internal regulations, etc. For details on the basic policy concerning allocation of an underwriter, please refer to information displayed at the premises or on the websites of that underwriter. Note: The descriptions of future profit distribution under the heading 4. Distribution of profit to shareholders above do not constitute a commitment to a certain amount of dividends, etc. Such descriptions are based on our projections. End. 10