Seibu selling stake in trendy Loft

TOKYO, Japan -- Troubled chain Seibu Department Store Ltd. is selling 65 percent of Loft Co., a general merchandiser.

Seibu will raise around 15 billion yen ($113 million) with the sale, Kyodo news service reported, quoting unnamed company sources.

It will use the money to pay down debt that it owes to banks after its subsidiary Seiyo Corp. went under. Seibu also plans to put some of the cash to use expanding Loft.

The chain is selling 25 percent of Loft to Mori Trust Co., with 19 percent going to Credit Saison Co. and failed department store Sogo Co. and general merchandiser Aeon both buying 10 percent each.

The deal is expected to close by the end of January. Seibu will then be left as the biggest shareholder, but with a 26 percent stake.

Loft has 23 trendy stores around Japan, targeting young women. Seibu and Aeon have already partnered on a store in Aichi prefecture.

Aeon is expected to set up Loft stores in Aeon stores as well as stores of Mycal Corp. Aeon is helping in the turnaround of Mycal, a grocery-store chain that went under last year.

Seibu is unlisted but stock in Aeon fell 3.8 percent to 2,880 yen, on a day the Nikkei dropped 2.3 percent.