Daiei, creditors
discuss bailout plan

The retailer, which operates
4 stores on Oahu, has $17.4 billion
in interest-bearing debt

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Associated Press

TOKYO >> Japan's largest retailer, Daiei Inc., is discussing with its creditors a possible bailout plan that may force it to sell its professional baseball club, the Fukuoka Daiei Hawks, along with other assets, major newspapers said today.

Daiei, burdened with an estimated $17.4 billion in interest-bearing debt, has been shuttering money-losing stores nationwide and eliminating jobs in recent months as it struggles to turn around its ailing supermarket business.

Daiei operates four stores on Oahu.

Its creditors -- led by Fuji Bank, Sanwa Bank, Sumitomo Bank and Tokai Bank -- are now considering a plan that would involve a $2.26 billion to $3.77 billion debt waiver and a debt-equity swap, the Asahi newspaper said.

In return, the banks may ask Daiei to commit to a painful overhaul, possibly including the sale of its stake in the Fukuoka Daiei Hawks baseball team, the team's Fukuoka Dome stadium and other businesses, the Asahi said, citing bank sources.

Daiei spokesman Mitsuru Sanno declined comment on the report.

"We are in the middle of developing a new restructuring plan. But nothing is decided yet," Sanno said, adding that a three-year program will be unveiled in February.

Japanese retailers have been hit by a fall in consumer spending as unemployment has risen to a record high amid Japan's decade-long economic slump.

Daiei has been trying to stave off bankruptcy in recent months. In November, the retailer asked its creditors for an infusion of capital, cut 4,000 jobs -- or 10 percent -- from its work force of 43,000 and said it would close dozens of stores. The banks agreed to buy an estimated $906 million of preferred shares and extended $3.77 billion in credit.