Troubled contractors Kumagai Gumi Co. and Tobishima Corp. said Monday they will delay the deadline for their planned merger for a year until April 2005 so they can prepare more carefully.
The two companies launched into a comprehensive tieup in business operations the same day. They said they will decide the type of management integration after examining the process of integration in each operation.
Also Monday, they set up a committee on management integration cochaired by Tobishima President Yoshiharu Tomimatsu and Kumagai President Kazutoshi Ukai.
In a news conference, Tomimatsu cited several options for management integration: regrouping by operational function; introducing a system to make each division more autonomous; and simply merging.
Tomimatsu said the decision will be made over the next year after Kumagai spins off its money-losing real estate business into a new company Oct. 1. The spinoff is planned to accelerate the disposal of nonperforming assets and concentrate on still-profitable construction and civil engineering.
Under the management integration scheme, the two companies will have civil engineering and construction work at home, together with overseas operations, as the core business.
Both contractors will also jointly undertake peripheral businesses, including house remodeling and reconstruction and restoration of buildings.
They also plan to move into new business fields, including environment-related technical projects.
Kumagai has asked its main creditor banks, including Sumitomo Mitsui Banking Corp., for a bailout of 300 billion yen, which brings the total amount of financial help to the contractor to about 750 billion yen.
Tobishima has asked its main creditor banks, including Mizuho Corporate Bank, for a 30 billion yen-bailout, which brings the total amount granted to the company to about 750 billion yen.