A Seibu group reform panel released an interim reform plan Friday urging Seibu Railway Co. to merge with a spinoff from Kokudo Corp., its core firm, absorb the Prince Hotels chain, and consider selling the Seibu Lions baseball team.

The plan also calls for Seibu Railway to increase its capital by 150 billion yen to 200 billion yen before the merger, and recommends the scandal-tainted group withdraw from or restructure about 40 of its 160 resort facilities, including hotels.

The panel approved a proposal to divide Kokudo into two companies, including the one that would merge with Seibu Railway, in order to reduce former Seibu group leader Yoshiaki Tsutsumi's influence over the group, the panel said. Seibu Railway will thus replace Kokudo as the core group company.

The group was effectively controlled by Tsutsumi through Kokudo, which is privately held. Tsutsumi stepped down as Kokudo chairman in October but remains its largest shareholder.

Mizuho Corporate Bank Vice President Takashi Goto, 55, is set to assume the presidency of Seibu Railway, replacing Terumasa Koyanagi, who resigned Friday.

Naoki Hirano, 63, a former official at the Land, Infrastructure and Transport Ministry, is to become chairman.

Hirano and Goto will become special advisers to the company Tuesday before assuming their respective posts at the general shareholders' meeting, which is to be held at a later date.

The panel, chaired by Ken Moroi, an adviser to Taiheiyo Cement Corp., has been considering how best to reform the Seibu group since Seibu Railway's stock price plunged last fall after it was revealed it had issued false financial reports. The company was delisted from the Tokyo Stock Exchange in December.

The panel is scheduled to map out a final package of reform measures in late March in collaboration with a council of major Seibu Railway group company presidents.