Dai Nippon to seek Tsuchiya-gumi tieup

Kyodo

Dai Nippon Construction will ask midsize construction firm Tsuchiya-gumi Co. to come to its rescue via an alliance, sources said Friday.

Dai Nippon filed July 5 for court protection from its creditors under the fast-track civil corporate rehabilitation law with parent-only debts of 271.2 billion yen. The Tokyo District Court granted the request July 10.

If Tsuchiya-gumi agrees to help, Dai Nippon plans to make full use of its capital accounts to pay off part of its debts and ask top shareholder Kinki Nippon Railway Co. to buy new shares.

In this event, its main creditor bank, UFJ Bank, would provide funds to finance Dai Nippon’s operations, it said.

Both companies are based in Gifu Prefecture.

Dai Nippon hopes to submit a restructuring program by Tuesday to the Tokyo District Court, calling for the debts of major creditors with outstanding claims of 3 million yen or more to be partially cut, according to company officials.

The Dai Nippon program also advocates halving the firm’s workforce and closing down unprofitable branches, they said.

Tsuchiya-gumi is also engaged in talks with other midsize construction companies seeking alliances, the officials said.

The officials said Dai Nippon, which will meet with its creditors to brief them on the debt-repayment plan in December, wants to strike an agreement with a company that will come to its rescue before the meeting.