Japan's troubled milk company seeks emergency loan

TOKYO (Reuters) -- Japan's beleaguered dairy producer Snow Brand Milk Products Co Ltd, at the heart of a food poisoning scare, said on Tuesday it had taken out an emergency credit line after retailers stopped stocking its products.

The news comes as a team investigators began inspecting the plants run by the country's biggest dairy producer, whose tainted low-fat milk left 14,555 people ill this month and set off a national health scare.

Local media said the inspections by a team of government and private researchers of Snow Brand's plants are aimed at reviving Snow Brand's credibility, tarnished after it said it reused milk products, some of which may have been out of date.

The company, facing allegations of negligence and possible criminal charges, last Wednesday temporarily closed all 21 of its milk plants. Kyodo news agency said the expert team will inspect five plants a day over four days ending next Monday.

A Snow Brand spokesman said there are no plans to resume production until the investigation results were clear, which he did not expect until after August.

The health scare has been a financial nightmare for the 75-year-old Tokyo-based dairy producer.

On Tuesday, it said it had taken out a 30 billion yen ($279.2 million) emergency credit line with its main banks, including Norinchukin Bank, Japan's largest agricultural financial institution.

It had not yet decided when it would use the loans, but it said the funds could be used as support for milk sales outlets and compensation to consumers who fell ill in Japan's most widespread food poisoning case.

Local media has reported that 30 out of 500 retail stores for Snow Brand have gone out of business after customers refused to buy their products.

Moody's Investors Service has said it may downgrade Snow Brand's long-term credit ratings, potentially making it difficult to raise funds, while its shares have tumbled more than 30 percent since the crisis began late last month.

Snow Brand's outstanding loans from financial firms totaled 4.2 billion yen ($38.85 million) as of March 31, 2000.

Snow Brand's stock stood at 404 yen on Tuesday, down 0.98 percent.

Kyodo reported that the inspections will check whether the plants can meet standards required for Hazard Analysis and Critical Control Point authorization -- a system used in many countries requiring plant owners to devise a series of scientific checkpoints to prevent foodborne disease.

Officials from Japan's Health and Welfare Ministry were expected to examine the results of the inspection, and an expert evaluation council would be launched shortly to give final approval based on the examination.

Plants that obtain the approval could resume operations, Kyodo said, quoting sources on the inspection team.

Numerous food and beverage producers have joined the list of firms recalling their products following the Snow Brand case.

On Monday, Japan's top bakery, Yamazaki Baking Co, recalled dessert products after consumers complained they tasted sour. A spokesman said the products had not been properly packaged. No one who had eaten the desserts had sought hospital treatment, he said.

Victims of the Snow Brand outbreak complained of diarrhea and vomiting after drinking low-fat milk.

Shikishima Baking Co said it was recalling bread products and stopping production after customers complained of mould.

A survey by local government officials showed more than 10 percent of all 774 milk plants across Japan have hygiene and other problems, Kyodo said.

Morinaga Milk Industry Co Ltd, Japan's third-largest dairy products supplier, temporarily closed a production line last week after 20 children fell ill after drinking its milk.

Kirin Beverage Corp a subsidiary of Kirin Brewery, said at the weekend it was recalling 70,000 cases of its popular Kirin Speed sports soft drink after complaints it tasted odd.

A parliamentary panel is to convene on Wednesday to question Agriculture Minister Yoichi Tani and Snow Brand officials on the causes of the incident.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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