Tokyo golf-course operator goes to Goldman


Japan's poor economy hurt Nitto Kogyo, still reeling from the bursting of Japan's golf-course bubble of the 1980s

TOKYO, Japan -- Nitto Kogyo Co., one of Japan's biggest golf-course operators, has filed for bankruptcy protection.

That leaves Nitto Kogyo in the hands of U.S. investment bank Goldman Sachs, which holds 100 percent of the company's equity.

There have been similar steps by rival U.S. investment banks to buy into Japan's golf business.

Nitto Kogyo runs 30 golf courses around Japan. It started life in 1960 but filed for court aid in 1997.

It and its 11 group companies sought shelter from creditors on Monday, with some 427 billion yen ($3.7 billion) in debts.

Most recently, Nitto Kogyo has seen its profits hit by Japan's recession, one of the worst since World War II. For its business year through September, it had total sales of 19.8 billion yen (about $170 million) but slumped to a negative net worth.

Struggling to pay back deposits

The Tokyo-based operator was struggling to pay back deposits that it owed golf-club members.

The company estimated it would take it more than 200 years to pay back 264 billion yen ($2.3 billion) in deposits it now owes, under its current structure, according to Jiji news service.

It will now reduce those debts dramatically in restructuring, the company said.

A bubble that burst

Japan's golfing industry crashed when the property bubble burst in the early 1990s. Prices soared in the 1980s, at the height of Japan's boom, which at one point saw the Tokyo stock market eclipse Wall Street in size.

But Wall Street is back. Goldman has worked with Nitto Kogyo for close to a year and is now assuming its debt.

According to the Wall Street Journal, it hopes to take on the company's debts for a small, undisclosed amount, settle claims against the company and return it to profitability.

A Goldman spokesman said it has negotiated a deal with banks owed 120 billion yen (about $1.0 billion).

The golf-course members will now lose virtually all of their deposits, the newspaper stated. But the members, who number in the tens of thousands, will likely retain their rights to play at the courses and may even get equity in the company.

Separately, five golf-course operators affiliated with builder Dai Nippon Construction Co. have filed for court protection. Dai Nippon itself went bankrupt on July 5.