Sogo Co., a financially beleaguered department store chain, has drawn up a restructuring plan that calls for the closure of four domestic stores and will ask its creditors to forgive loans totaling 639 billion yen, industry sources said Wednesday.
Sogo Chairman Hiroo Mizushima is expected to step down if the request for debt forgiveness is approved by creditors, the sources said.
Sogo will likely ask the Industrial Bank of Japan to forgive 180 billion yen, or 28 percent of the total amount of loans the company wants waived. It will also ask the Long-Term Credit Bank of Japan to waive 100 billion yen, or 15 percent, the sources said.
The company plans to cut its group workforce by 2,000 to 8,000, the sources added.
Sogo, an Osaka-based chain that has branched out overseas, is laden with 1.7 trillion yen worth of interest-bearing liabilities. In October, it drafted a restructuring plan to scale down the operations of 13 money-losing stores.
The company has come to the realization that more drastic restructuring and cooperation from creditor financial institutions are necessary for its survival, the sources said.
Sogo is discussing with its creditors selling its equity stake in the Sogo department store in Taipei, which is jointly operated with a local partner. It is also considering restructuring steps at other overseas units.
Sogo has 27 stores in Japan and 14 overseas.