Sumitomo Bank is poised to forgive a 250 billion yen chunk of loans taken out by Kumagai Gumi Co. in an attempt to help the teetering construction firm stave off collapse, sources said.

But it appears Sumitomo will swallow even more of Kumagai Gumi's bad loans.

Shinsei Bank, another large Kumagai Gumi creditor, is carrying 182 billion yen in loans to the firm. Of the total, the foreign-owned bank is reportedly ready to waive its claim on 98 billion yen.

Of the rest, 84 billion yen, Sumitomo is being asked to buy 70 billion yen, the amount Shinsei cannot cover with loan-loss reserves it has already built up, the sources said Wednesday.

Now that the outline of the contractor's rehabilitation has been penciled in, Kumagai Gumi will formally ask 15 major creditors -- including Sumitomo and Shinsei -- to forgive debts worth 450 billion yen, possibly Monday, the sources said.

The sum of the proposed debt waiver would be one of the largest within the heavily indebted industry, in which a spate of bankruptcies and debt acquittals have been piling up since 1997 among smaller companies.

Sumitomo also plans to send one of its executives to the contractor. He is expected to sit on the board of directors and be second-in-command.