The government said Friday it hasn't ruled out taking a stake in Tokyo Electric Power Co., which has lost more than 80 percent of its market value since the crisis started at its Fukushima No. 1 nuclear plant.
"Investing in Tepco is a move that's been reported as being a viable option," Chief Cabinet Secretary Yukio Edano said. "To be accurate, I can say that taking a stake isn't one of the options that has been ruled out."
Public funds may be necessary to ensure Tepco can supply electricity to Tokyo heading into peak summer demand and pay compensation to companies and individuals affected by the nuclear crisis.
Any stake won't exceed 50 percent and the government may also offer a loan guarantee, the Mainichi Shimbun reported Friday, citing an unidentified government official.
Tepco has about ¥5 trillion in bonds and loans outstanding, the fourth-highest amount among components of the Nikkei 225 stock average after Toyota and two banks.
Under the worst-case scenario, Tepco would be unable to absorb losses even after a capital reduction and debt-to-equity swap of government-guaranteed debt, Yusuke Ueda, a credit analyst at Bank of America Merrill Lynch, wrote in a report Tuesday.
The utility may face claims of less than ¥1 trillion if the crisis is resolved within two months and as much as ¥3 trillion if it takes about six months, Ueda wrote.