Hazama Corp. said Wednesday that its four main creditor banks have agreed to forgive a combined 105 billion yen in loans to the debt-saddled construction company.

Under the agreement Dai-Ichi Kangyo Bank will forgive 48.9 billion yen, Mitsubishi Trust & Banking Corp. will not reclaim 34.6 billion yen, Shinsei Bank has agreed to waive 15.3 billion yen and Nippon Credit Bank will forgive 6.1 billion yen, Hazama said.

The debt forgiveness is the main pillar of a restructuring program announced in May, under which Hazama aims to write off 120 billion yen in losses in fiscal 2000 and halve its group interest-bearing debts by March 2005 from the 420 billion yen recorded at the end of March.

The latest deal requires DKB and Mitsubishi Trust to purchase Shinsei Bank’s remaining loans to Hazama. Shinsei Bank has 43 billion yen in outstanding loans to the ailing construction company.

DKB said it will buy 18.3 billion yen worth of Shinsei Bank’s remaining loans. Mitsubishi Trust also said it will purchase some of the remaining loans but did not disclose the amount.

Both DKB and Mitsubishi Trust said they have sufficient loss reserves to cover the Hazama loans they will forgive and that the deal will not have an impact on their earnings projections.

NCB will retain its remaining loans to Hazama for five years, during which time the troubled firm will strive to rehabilitate itself, sources close to the bank said.

Shinsei Bank and NCB did not use a special loss-coverage clause included in their contracts.

under which they were sold earlier this year. The clause allows them to ask the government to buy their loans to Hazama if the value of the loans falls by 20 percent or more within three years.

Instead, both banks decided to waive their loans to Hazama within the range of their loan-loss reserves.

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