Ailing retail giant Daiei Inc. sought support from its three main creditor banks Friday for its plan to turn around its business without help from the state-backed Industrial Revitalization Corp. of Japan -- but the bank executives wanted no part of it, company officials said.
Daiei President Kunio Takagi told top executives of UFJ Bank, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp. that Daiei can be resuscitated under private-sector guidelines on corporate restructuring, the officials said. The executives simply reiterated their request that Daiei turn to the IRCJ for help.
The guidelines, drawn up by big businesses, financial institutions and various experts in 2001, call on companies seeking debt waivers to assure investors that they would recover from a negative net worth and become profitable in three years.
It also stipulates that top executives at these restructured companies must resign once the debts are forgiven.
During monthlong negotiations with the banks, Daiei staunchly objected to the use of IRCJ aid, saying it would be able to rehabilitate itself with capital contributions from a number of investment banks and investment funds.
Daiei's plan calls for creditor banks to provide 390 billion yen in the form of loan waivers to help trim more than 1 trillion yen in interest-bearing debts on a consolidated basis.
It also proposes issuing shares to investment funds and other investors to raise 100 billion yen, which would be used to open new stores.
They are also concerned that accepting the revival plan could prompt lawsuits by their shareholders because they already provided the nationwide supermarket chain operator with financial assistance in 2001 and 2002.