JR West to take control of Nippon Travel

West Japan Railway Co. (JR West) will make Nippon Travel Agency Co. a subsidiary through a third-party allotment of shares totaling 6 billion yen, the companies said Wednesday.

JR West is already the third-largest shareholder in Nippon Travel with a 33.3 percent stake. The companies said the transaction, scheduled for Dec. 5, will bring the total to 77.7 percent.

Nippon Travel, hit hard by the impact of the Sept. 11, 2001, terrorist attacks in the United States and the prolonged economic slump in Japan, said it will use the capital injection to upgrade computer systems, open new shops and strengthen its financial position.

Established in 1905, Nippon Travel is the nation’s third-largest agent.

After a merger plan with Kinki Nippon Tourist Co. broke down in February, Nippon Travel drew up a fresh rehabilitation program with an eye to listing its stock in 2007, and has been looking for sponsors for the third-party allotment.

Currently, six JR group companies own a total of a 50 percent stake in Nippon Travel. But the stakes of these firms, apart from JR West, will be pushed down by about a third each, Nippon Travel said.

East Japan Railway Co.’s stake will be reduced from 9.05 percent to 3.02 percent, Central Japan Railway Co.’s from 4.8 percent to 1.6 percent, and Kyushu Railway Co.’s from 1.95 percent to 0.65 percent.

For the January-June period, Nippon Travel posted operating losses of 3.2 billion yen and pretax losses of 2.9 billion yen on sales of 24 billion yen.

For the full calendar year, the company expects net losses of between 1.2 billion yen and 1.3 billion yen.

Nippon Travel has about 3,500 employees.