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Nippon Credit Bank has agreed to waive 6.1 billion yen in loans to debt-ridden Hazama Corp. while maintaining its remaining loans worth 12.8 billion yen to the contractor for the time being, sources close to the deal said Friday.

NCB and three other major creditor banks of Hazama had earlier agreed to forgive a total of 105 billion yen in loans extended to the ailing firm, but details of how NCB would deal with its outstanding loans to the contractor had yet to be decided.

NCB will not use a clause allowing the bank to request that the state buy its loans to Hazama if the value of the loans falls by 20 percent or more, and NCB will waive its loans to the contractor within the range of its loan-loss reserves, the sources said.

The clause was agreed on by the government and a Softbank Corp.-led consortium when the latter bought NCB, which went bankrupt and was put under state control in December 1998.

Now that details of how NCB will deal with its loans to Hazama have been worked out, a reconstruction plan for Hazama will be announced as early as next week.

In a related development, Shinsei Bank will forgive 15.3 billion yen in loans to Hazama and will have Dai-Ichi Kangyo Bank and Mitsubishi Trust & Banking Corp. buy Shinsei’s other loans extended to the contractor.

The move is based on Shinsei’s fears that Hazama could fall into a management crisis and its loans could produce additional losses, the sources said.

On the other hand, NCB believes Hazama’s rehabilitation plan is sound and the possibility is low that its loans will produce secondary losses, the sources said.

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