Kanebo Ltd. believes it can reduce its interest-bearing liabilities to less than one-seventh the current level over three years, according to sources.

The struggling textile maker estimates its interest-bearing debts, which totaled 601.3 billion yen in the year ended March 31, will come to about 81 billion yen in the business year ending in March 2007 due to anticipated financial aid and proceeds from the sale of its cosmetics business, the sources said.

The estimates will be formally unveiled Monday, when the company explains a business plan to its creditors, they said.

Kanebo spun off its cosmetics business in early May as part of its rehabilitation efforts.

Under the business plan, Kanebo plans to pull out of the red at the end of the current fiscal year, forecasting an operating profit of 2 billion yen.

The company expects the operating profit to grow to 9.2 billion yen in the year ending March 2007, but its sales are estimated at 166 billion yen in the year, down 30 percent from sales in the just-ended year, excluding those from the cosmetics business.

On Monday, the Tokyo-based company released a new revival plan, featuring a reduction in its core business and a debt waiver of 99.5 billion yen by its creditor financial institutions, including Sumitomo Mitsui Banking Corp.

Kanebo recorded a consolidated negative net worth of 355.34 billion yen in fiscal 2004. It plans to ask about 1,800 employees, or about 40 percent of its total labor force, to leave the company in the next three years.