Struggling steelmaker Toa Steel Co. has decided to liquidate itself in what will become the largest manufacturing failure to date in Japan's postwar era, a corporate credit research agency said Thursday.
A formal decision on the self-liquidation is reportedly expected to be announced late Thursday night or early today after a meeting of Toa Steel's board of directors.
Weighed down by interest payments on loans that financed deep capital investments over several years, Toa Steel has been suffering from reduced demand for steel, exacerbated by the ongoing economic slump.
In fiscal 1997, Toa Steel posted its fourth consecutive unconsolidated pretax loss, some 24 billion yen, on 131.2 billion yen in sales. While the firm's liabilities were not immediately available, estimates by the Japanese economic daily Nihon Keizai Shimbun put the amount at about 260 billion yen, which if true would make the failure larger than that of Mita Industrial Co., the photocopier maker which filed for court protection last month.
In anticipation of the move, expected to be the largest liquidation in Japan's postwar history, Toa Steel's parent company NKK Corp. is apparently reserving an extraordinary loss in excess of 50 billion yen for the current business period, according to research agency Teikoku Databank.