Kanebo Ltd. will reduce its capital by 99 percent as part of its rehabilitation plan under the auspices of the state-backed Industrial Revitalization Corp. of Japan, sources said Thursday.
After the capital reduction, the IRCJ will purchase some 10 billion yen worth of new Kanebo shares and acquire a majority stake in the company.
Kanebo, which has already spun off its core cosmetics business, will include the capital reduction in its revival plan for other businesses, including textiles and pharmaceuticals, which will be announced Monday.
The plan, for which the IRCJ will decide to provide support on the day of the announcement, is designed to convert Kanebo into a supplier of daily necessities and drugs.
It calls for Kanebo to reduce its roughly 5,000-strong workforce by more than 20 percent.
Kanebo will ask creditor banks for more than 100 billion yen in financial support, including loan waivers.