The Don Quijote Co. discount store chain disclosed Monday that its president, Takao Yasuda, provided loans to a former Cats Inc. executive who has been arrested on suspicion of manipulating that company's share price.

Last Friday, Don Quijote denied media reports that it had been investigated by prosecutors over the alleged transfer of money to Cats, a leading pest-control firm, in connection with the suspected share price manipulation.

But in a statement Monday, the Tokyo-based discount store chain said Yasuda had provided his own money to former Cats President Hirotaka Otomo at Otomo's request.

Yasuda and Otomo, as fellow venture entrepreneurs, are reportedly close.

Otomo, 53, and Koei Murakami, 49, the current president of Cats, were arrested Wednesday on suspicion of illegally raising the price of the firm's shares over two years, beginning in August 2000.

Prosecutors searched Don Quijote's headquarters in Tokyo for evidence of the allegation that Otomo and Murakami, who are believed to have taken out bank loans for the stock manipulation scheme, also used money from Don Quijote to finance their operation.

According to Don Quijote, Yasuda received Cats stock as collateral for the loan, and Otomo repaid the full amount in three months.