Major construction firm Hazama Corp., in an attempt to convince major creditors to forgive some of its debts of 420 billion yen, is seeking tieups with other contractors, among them Niigata-based Fukuda Corp., industry sources said Tuesday.

The two companies are negotiating the specifics of the alliance, which Hazama hopes will save it from liquidation. The alliance, if realized, is likely to prompt creditor banks to fulfill Hazama's debt-waiver requests.

The sources said Dai-Ichi Kangyo Bank and Mitsubishi Trust & Banking Corp., two of Hazama's major creditors, are backing the deal.

In a statement Tuesday, however, Fukuda, a midsize contractor, denied receiving a request for an alliance from Hazama and said it was not in talks with the struggling firm.

Hazama made similar denials.

Hazama's creditor banks have apparently been pushing for a tieup between the two because they believe Hazama is unlikely to survive under current conditions.

Hazama, which was saddled with about 420 billion yen in interest-bearing debt on a consolidated basis as of March 2000, has asked its major creditor banks to write off 105 billion yen of its debt.

If the deal with Fukuda goes through, DKB is expected to write off 65 billion yen of Hazama's debt, Mitsubishi Trust about 30 billion yen and Shinsei Bank, formerly the Long-Term Credit Bank of Japan, about 10 billion yen, the sources said.

The three banks are still negotiating the exact share of their commitment.

The nationalized Nippon Credit Bank, another major Hazama creditor, is expected to calculate its share of the writeoff after it is sold next month.

Fukuda is primarily involved in railroad, port and energy-facility construction work.

The company, which has about 1,400 employees, posted 133.8 billion yen in revenue and 2.7 billion yen in operating profit in the business year that ended in December 1999.

Hazama, which has 4,700 employees, made a modest comeback after posting a loss of 65.8 billion yen in the 1998-1999 business year. For the business year to March 31, the company posted 452.4 billion yen in revenue and 9 billion yen in operating profit.