|
||||||||
  |
||||||||
|
||||||||
|
||||||||
|
||||||||
|
||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Seibu mulls Sogo merger in bailout
TOKYO, Japan (CNN) -- Embattled chain Seibu Department Stores Ltd. says it is discussing plans for an overhaul with Mizuho Corporate Bank, its main lender. Those discussions aim to create a mid-term business plan for the chain. According to local media, that involves a merger with rival department store Sogo. Seibu confirmed that it is considering a merger with Sogo as one option. Sogo has been working with Seibu to turn itself around since filing for bankruptcy in July 2000. According to the Nihon Keizai Shimbun, Seibu also plans to ask its six main banks and Credit Saison Co., its main shareholder, for a 200 billion yen ($1.65 billion) bailout. Looking to trim debtThe move is a bid to trim its debt load of 580 billion yen ($4.8 billion) in preparation for integration with Sogo, the Nikkei said. Around 10-30 billion yen of the total would involve swapping debt for equity in the chain, a common strategy to reduce interest-bearing obligations in Asia. Seibu will reportedly ask Mizuho to forgive around 100 billion yen in debts and will ask its five other top creditors to forgive up to 10 billion yen. If it goes ahead, that would be the biggest corporate bailout in Japan since lenders rescued retail chain Daiei Inc. with a $3.5 billion aid package in February. Critics said that showed Japan is not serious about corporate reform. (Full story) Selling off assetsSeibu was one of Japan's most-glamorous retailers during the country's boom in the 1980s. But it fell on hard times as Japan's bubble economy burst. Japan is plagued with deflation, which causes prices to sink and encourages consumers to put off spending as much as possible. Matters were made worse for Seibu when its real-estate subsidiary Seiyo Corp. went under. The writedown has contributed to a significant drop in shareholders' equity for the privately held company. In January, Seibu sold 65 percent of its trendy Loft Co. subsidiary to four companies, including Sogo, for around 15 billion yen ($124 million), in a bid to pay down debt. (Full story) Besides paying down debt, Seibu also plans to use the money from any bailout to pay to shut down unprofitable stores and liquidate some affiliates. Sogo and Seibu are likely to consider forming a joint holding company to take over the operations of both companies.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||
