Taisei Corp., a major general contractor, will launch a three-year restructuring effort to resolve 100 billion yen in groupwide liabilities by March 31, 2003, company sources said Wednesday.
The plan calls for liquidating ailing affiliates and selling assets such as golf courses, hotels and equities, the sources said. At the same time, it will reduce the number of board members from 50 to around 20, and study the possibility of selling its headquarters building by securitizing it, the sources said.
Taisei’s announcement may induce similar moves by other major contractors, such as Shimizu Corp. and Kajima Corp., which are also ailing under mounting debts.
The latest development shows that the wave of restructuring in the financial and the manufacturing sectors is now hitting the big construction companies. Several smaller contractors have already announced restructuring bids, and the trend may jack up the nation’s already soaring jobless rate, given the sector’s large number of payrolls and its role as an employment sponge for the nation’s jobless.
Taisei’s move comes after an earlier plan to trim the balance of its groupwide interest-bearing debts to less than 960 billion yen in the next three years, compared to 1.28 billion yen estimated as of Wednesday, the end of fiscal 1998. On an unconsolidated basis, the company plans to reduce interest-bearing debt from 630 billion yen to 540 billion yen during the same period.
To assist remaining affiliates, the company hopes to tap part of its working capital and utilize about 70 billion yen to be made available annually by adopting a new accounting system to be introduced today.
The company logged 112 billion yen in final losses in fiscal 1997, which ended March 31, 1998, as a result of 125 billion yen in special losses.