The Industrial Revitalization Corp. of Japan, which has been asked rehabilitate Daiei Inc., plans to close 53 of the money-losing supermarket chain's 263 outlets across Japan, sources familiar with the plan said Wednesday.
The state-backed corporate revival entity will also ask Daiei's creditor banks for 410 billion yen in debt-waivers and consider investing in the struggling retailer, the sources said.
IRCJ will formalize a bailout package for the moribund retailer by the end of the year after negotiating with Daiei, its main creditor banks, and companies willing to sponsor its rehabilitation, they said.
The package will likely call on Daiei to improve its financial standing by selling off real estate assets and requesting debt-waivers to slash its more than 1 trillion yen in interest-bearing debt.
Under Daiei's rehabilitation program, which is being drafted mainly by IRCJ, 100 billion yen to 200 billion yen from IRCJ and sponsor companies is being eyed for investment in store openings and renovation. The sponsors will be chosen early next year from a list of firms that submitted rehabilitation proposals.
Daiei had planned to close 46 stores under its own rehabilitation plan, but IRCJ is pushing for the closure of 53, which have not been identified yet, the sources said.
Under the program, it is estimated that, on a consolidated basis, about 2,000 employees will be made redundant by the closures, they said, adding that IRCJ may transfer them to new stores to be opened by the sponsoring companies. The Daiei group now has 22,000 employees.
IRCJ's program also calls for Daiei to focus on its supermarket operations.