Struggling restaurant chain Watami Co. on Thursday admitted to holding talks on a handover, following media reports that it plans to sell its nursing care business and focus on food servicing operations centered on its namesake Japanese-style taverns.
Sources familiar with the matter said Watami has invited bids to seek a potential buyer for its nursing care subsidiary Watami no Kaigo Co. and that Sompo Japan Nipponkoa Holdings Inc. took part in a tender.
Sompo Japan confirmed it was considering buying Watami’s nursing care business.
Watami, which is listed on the Tokyo Stock Exchange, has seen its earnings slump following revelations an employee committed suicide just weeks after joining in what the labor office linked to overwork.
Major creditor banks have been calling on Watami to review its asset portfolio to curb its debt of more than ¥30 billion as of the end of March.
Watami hopes to select a buyer for the nursing case business in about a month and use the proceeds from the sale to squeeze debt, the sources said.
Watami no Kaigo was set up in 2004 and expanded its operations by acquiring another company running homes for the elderly. It operates about 110 fee-based nursing homes in Tokyo, Kanagawa, Osaka and five other prefectures under the Rest Villa brand.
In the year ended March, Watami suffered a ¥12.66 billion consolidated net loss, stemming chiefly from sluggishness in its mainline food servicing operations in Japan and abroad.
The Tokyo-based company is aiming to return to profitability in the current business year by closing down unprofitable outlets and tapping the growth in foreign tourists coming to Japan.
Watami founder Miki Watanabe had expanded the restaurant group into nursing care and food delivery services until he left its management to others in 2013 to become a member of the House of Councilors.