U.S. investment fund Cerberus Asia Capital Management LLC has agreed to waive claims on 17 billion yen of its 23 billion yen in credits to Dia Kensetsu Co., the nation's second-largest condominium builder, it was announced Tuesday.
Under the same agreement, Delaware-based Cerberus will funnel 4 billion yen to Dia through the purchase of convertible bonds it will float, the two companies said.
In a press release, the builder said the bonds will be converted into Dia shares in the near future.
When all the bonds are converted into common stock, Cerberus will be Dia's largest shareholder, with a 24.1 percent stake. The contractor's net worth stood at only 16.9 billion yen on a group basis as of March 31.
It incurred a 7.1 billion yen group net loss in closing midterm books for the first half of fiscal 2000 and is seeking to rehabilitate its debt-ridden corporate finances under a five-year reconstruction plan.
Cerberus earlier bought the 23 billion yen loan to Dia from an affiliate of the failed Nippon Credit bank that was nationalized in late 1998. NCB itself was sold on Sept. 1 to an investment group led by Softbank Corp.
Under the Dia-Cerberus deal, the two also agreed to launch a securitization business based on cash flows expected to accrue from Dia's real estate holdings.
Cerberus is a major investment group that specializes in helping companies seeking to rehabilitate their finances.
It is also involved in the rehabilitation process for major retailer Nagasakiya Co. through a stock-investment scheme.