Japan Metals & Chemicals Co., the nation's top ferroalloy manufacturer, on Friday afternoon stopped trying to rehabilitate itself and filed for court protection from creditors.
The company, which has close ties with Nippon Steel Corp. and group debt estimated at 141 billion yen, filed for protection under the Corporate Rehabilitation Law with the Tokyo District Court.
According to sources, the Tokyo-based company plans to ask Nippon Steel for assistance in its key ferroalloy production operations. The company hopes to generate profit by strengthening its fuel-cell business and other profitable areas, while terminating loss-making operations.
Japan Metals is listed on the first section of the Tokyo Stock Exchange.
Reports earlier in the day of the company's imminent filing for court protection prompted the TSE to suspend trading in Japan Metals to give investors time to digest the news. The bourses in Osaka and Nagoya followed suit.
Japan Metals is the first major manufacturer to go bankrupt since Niigata Engineering Co., a midsize heavy-duty machinery maker based in Niigata Prefecture, went under in November.
Japan Metals' business worsened due to a plunge in ferroalloy prices on the international market and slack domestic demand, resulting in net liabilities in the 1999 calendar year.
The company was also hit by the global slump in the information technology sector.
Its business did not improve despite rehabilitation efforts, including the transfer of its information technology division to a third-party firm, personnel cuts and streamlining of subsidiaries.
Japan Metals incurred a group net loss of 2.8 billion yen in the first half of 2001 on sales of 32.4 billion yen.
The company expects to post a group net loss of 7.9 billion yen for the full year. Its net liabilities stood at some 27 billion yen as of June 30.
The Japan Metals group has 1,400 workers.