Financial authorities are not considering, at present, reviewing a controversial bailout plan for Sogo Co., the Financial Reconstruction Commission chairman said Tuesday.
“At this moment, we have not received any instruction from the prime minister,” Kimitaka Kuze told a news conference.
Under the scheme, endorsed by the FRC on June 30, the government-affiliated Deposit Insurance Corp. will purchase 200 billion yen in loans to Sogo from Shinsei Bank, formerly Long-Term Credit Bank of Japan, with an eye to waiving 97 billion yen of the debt. The scheme has since invited fierce public criticism.
On Monday, officials of the Liberal Democratic Party said Prime Minister Yoshiro Mori instructed the party to review the bailout plan for the ailing department store.
“I hope the chairman of the (LDP) policy research council will play a key role in considering (the bailout plan), as the people have a keen interest in it,” Mori was quoted as telling Koji Omi, acting secretary general of the LDP.
FRC officials also told council members it is thinking of reviewing the scheme.
During Tuesday’s news conference, Kuze said DIC will modify its plan only if “major changes” are made in Sogo’s reconstruction plan, noting that remarks by FRC officials Tuesday were made on such an assumption.
At the same time, however, Kuze said, “I duly understand the gravity of discussions within the LDP as well as those by the three ruling parties.”
Kuze meanwhile cautioned other borrowers of LTCB not to expect from the government the kind of preferential treatment given to Sogo.
The commission will exert caution in considering a debt waiver request, if any, from other borrowers of Shinsei, he said, noting that the FRC will not treat problems of other borrowers in the same way as it did in the case of Sogo.
Ailing Seiyo to get cash
Saison Group founder Seiji Tsutsumi is expected to fork out 9 billion yen in private funds to help wind up the financially ailing Seiyo Corp., a real estate developer in the Saison retail group, according to informed sources.
The Tokyo-based real estate developer, which had chalked up a 460 billion yen capital deficit as of March 31, is expected to file for liquidation shortly with the Tokyo District Court.
Tsutsumi , who played a key role in pushing for Seiyo’s aggressive expansion. , which has gone sour, will apparently raise the cash by selling stocks he holds in various Saison group companies. Apart from Tsutsumi’s private funds, Seibu Department Stores will provide nearly 50 billion yen to Seiyo by selling off its flagship store in Tokyo’s Ikebukuro district.
Altogether, the Saison group is bearing nearly 100 billion yen in Seiyo’s liquidation, while Dai-Ichi Kangyo Bank and other creditor banks will shoulder more than 300 billion yen.
Seiyo has been dogged by real estate investments that have soured in Japan’s prolonged depressed real estate market after the burst of the economic bubble in the early 1990s.