to press ahead
Daiei Inc., Japan's third-largest retailer, refused a request by its three biggest creditors that it seek help from the government's bailout agency, Daiei President Kunio Takagi said.
UFJ Holdings Inc., Sumitomo Mitsui Financial Group Inc., and Mizuho Financial Group Inc. asked Daiei yesterday to apply for aid from the Industrial Revitalization Corp. of Japan, Takagi told a group of reporters last night at his home in Chiba, near Tokyo.
"There is a gap between the retailer and the banks' basic concepts for the restructuring," said Akira Mizobuchi, a banking analyst with Nomura Holdings Inc. "The retailer wants to maintain its supermarket business as it is, and the banks want to focus on cleaning the debt."
Takagi said he told the bankers that the company would stick to its own rehabilitation plan.
Daiei must agree to seek help in order for the government to provide assistance. Daiei's management is reluctant to do so because of concern that the company may lose autonomy, according to Japanese media reports.
"I am not considering using the bailout agency," Takagi said. "We and the banks confirmed that we will try to come up with a speedy and radical solution for restructuring."
Kobe-based Daiei today reiterated it had told lenders it has no plans to seek aid from the IRCJ, according to a statement released through the Tokyo Stock Exchange. The retailer said it is in talks with its main creditors on the new business plan starting March 2005, the statement said.
Takagi said last week it plans to cut its debt, which totaled $9.7 billion as of Feb. 29, by half in 18 months by reorganizing the group, shutting unprofitable stores, and raising funds from private equity funds.
The retailer may face difficulty in raising money from the market because its creditworthiness has dropped as it failed to reorganize during the two previous bank bailouts, said Nomura's Mizobuchi.
The IRCJ was founded to provide funds and management aid to Japanese companies "that have sound business fundamentals but are unable to thrive because of excessive debt levels and other factors," according to the agency's Web site.