TOKYO (Reuters) - Apple Inc AAPL.O supplier Japan Display Inc 6740.T said on Thursday that Chinese investment firm Harvest Group would withdraw from a bailout of the cash-strapped smartphone screen maker, increasing the chance of the 80 billion yen ($743 million) deal collapsing.

FILE PHOTO: Japan Display Inc's logo is pictured at its headquarters in Tokyo, Japan, August 9, 2016. REUTERS/Kim Kyung-Hoon/File Photo

The pullout of Harvest, which had offered to inject three quarters of the bailout, is a severe blow for Japan Display, which has been hit by Apple’s slowing iPhone sales and a late shift to organic light-emitting diode (OLED) screens.

But Minoru Kikuoka, Japan Display’s chief financial officer, said at a press briefing there were no worries about an immediate cash crunch, thanks to loans extended by Japanese government-backed fund INCJ, its biggest shareholder.

Harvest decided to pull out due to disagreements with other members of the investor group over governance, Japan Display said. The Japanese company will look for new investors to replace the Chinese fund while keeping up talks with Harvest with the aim of receiving promised investment, it added.

Meanwhile, a major Japan Display client, which sources said is Apple, intends to double its planned investment to $200 million, if Japan Display could find other investors to partially replace Harvest by the end of this year, Japan Display said.

Apple Japan was not immediately available for comment.

Apple accounted for 60.6% of Japan Display’s revenue in the last financial year ended March. Japan Display still owes Apple nearly $900 million for the $1.5 billion cost of building a smartphone screen plant four years ago.

Hong Kong-based activist investor Oasis Management is still sticking with its plans to contribute $150-180 million. In addition, a major supplier and other private equity funds are showing interest in joining the deal, Kikuoka said.

“Those investments would make enough funds to keep our business going,” he said, although he declined to specify when the investments would be made.

The investments would give the investor group a 49.8% stake in Japan Display, replacing Japanese government-backed fund INCJ as Japan Display’s biggest shareholder.

Japan Display first agreed on the bailout deal with the Chinese group in April, but was forced to change the structure as some members dropped out after making checks on Japan Display’s financials.

Japan Display in August reported a tenth consecutive quarterly loss and logged a negative net worth, with liabilities exceeding assets by 77.2 billion yen.

Japan Display was formed in 2012 by combining the liquid-crystal display businesses of Hitachi Ltd 6501.T, Toshiba Corp 6502.T and Sony Corp 6758.T in a government-brokered deal.