UFJ Bank, Dai-Ichi Kangyo Bank and Asahi Bank have entered informal talks with Daikyo Inc. on the provision of up to 500 billion yen in financial assistance to Japan's largest condominium builder, industry sources said Saturday.
The banks are considering a financial assistance package including a debt-for-equity swap and debt forgiveness so that Daikyo can reduce its group interest-bearing debts of more than 1 trillion yen, the sources said.
Daikyo, known for its nationwide Lions Mansion condominiums, has been trying to reconstruct its business without financial help from banks and the outcome of the talks is unclear, the sources said.
Daikyo's financial condition deteriorated after failed investments in real estate in the 1980s asset-inflated bubble economy saddled it with huge debts.
In 1997, the company invited Masaharu Hasegawa, a former official of its main creditor Sanwa Bank, now UFJ Bank, to lead it and tried to improve its financial health.
In January, Daikyo divided its corporate structure into three in-house divisions -- mainline condominium development business, a noncondominium real estate unit and an administrative division -- to cut its group debts.
Daikyo is mapping out a new restructuring plan centering on the reduction of its group interest-bearing debts.
Of its group debts, the noncondominium real estate division has 730 billion yen, while the profitable condominium unit 430 billion yen in the red.
Daikyo, with a workforce of 7,200, posted 392.6 billion yen in revenues and a 6.2 billion yen net profit in the fiscal year that ended in March 2001.