Bank demands
Daiei get help
from bailout agency
UFJ Holdings Inc., Japan's fourth-largest bank, rejected a plan by Daiei Inc. to seek bailout proposals from private investors including Wal-Mart Stores Inc., insisting the retailer apply for government aid today.
UFJ Bank Ltd., the main creditor of Japan's third-largest retailer, won't provide assistance without the involvement of the Industrial Revitalization Corporation of Japan, the bank's president, Takamune Okihara, told reporters in Tokyo. Daiei's insistence on seeking private funds to help halve its $9.1 billion of debt is "unbelievable," he said.
Daiei President Kunio Takagi, who oversees 266 supermarkets and general merchandise stores, is refusing to seek help from the bailout agency, favoring a private solution that would leave him more control over the outcome. UFJ wants to cut its loans to Daiei before a merger next year with Mitsubishi Tokyo Financial Group Inc. to create the world's largest bank by assets.
"Obviously, Daiei is going to lose power if it turns itself over to the IRCJ," said Martin Schulz, who oversees $800 million in international stocks at National City Investment Management in Cleveland. UFJ wants " to clear the deck so they can get their books in order."
Kobe, Japan-based Daiei is asking for preliminary proposals from Wal-Mart, Cerberus Partners LP, Marubeni Corp. and other potential investors by Oct. 18.
Daiei's future is creating a dispute within Japan's government. Executives from the retailer will visit the bailout agency's offices, Seiichiro Murakami, Japan's minister for administrative reforms, said.
The agency set today as the deadline for Daiei to seek its help in a government-led reorganization, and the agency won't consider a plea for help after that, according to Shoichi Nakagawa, Japan's trade and industry minister.
Chief Cabinet Secretary Hiroyuki Hosoda said today that Nakagawa wants to wait until Oct. 18 to see the proposals put forward by private investors.
Wal-Mart, the world's biggest retailer, is interested in adding Daiei's general merchandise stores to its Japan business. It hired Dresdner Kleinwort Wasserstein and Goldman Sachs Group Inc. to advise on a possible bid.
Bentonville, Ark.-based Wal-Mart owns 37 percent of Seiyu Ltd., which operates 210 stores in Japan. Aeon Co., Japan's largest retailer, operated 364 stores and supermarkets as of February, according to its Web site.
UFJ was the biggest contributor to two previous bailouts of Daiei, which totaled 520 billion yen. Other creditors include Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
