OSAKA -- Mycal Corp. supermarket chain and game software developer Konami Co. said Monday they have agreed on the sale of a majority stake in People Co., a major health club chain belonging to the Mycal group, by late February.

Kagemasa Kozuki, president of game software developer Konami Co., speaks during a press conference.

Mycal said in a statement that it will sell to Konami almost all of its 10,044,163 shares in People, about a 53.3 percent stake, held by Mycal Finance Corp. for about 67.3 billion yen. Mycal Finance will be absorbed by its parent at the end of February.

With the sale of People, Mycal said it aims to "concentrate management assets in its retail business, to create stable cash flows for group businesses and to sharply reduce the group's interest-bearing debts."

The company was saddled with 1.16 trillion yen in interest-bearing debts on a group basis as of the end of August.

Konami said in a statement that it plans to buy up to 60 percent of the outstanding shares in People. This includes the 53.3 percent stake held by the Mycal group.

For the remaining shares, it will accept tenders for sale on the market from today to Feb. 19. It is offering a price of 6,700 yen for each share, which has a book value of 50 yen.

Tokyo-based People, established in 1973 and capitalized at 1.04 billion yen, is one of Japan's largest health club chains, running the XAX gyms and Freizeit health-care/entertainment facilities nationwide.

It posted net profits of 2.3 billion yen on sales of 52.8 billion yen on a consolidated basis in the business year to Feb. 29.

The selloff of People is in line with Mycal's three-year restructuring plan announced last Wednesday, under which it aims to slash group debts to 910 billion yen by Aug. 31.

"The company has studied the sale since last fall. Konami showed a strong interest in purchasing since early on," Mycal President Kotaro Utsunomiya said at a press conference.

"We thought it (the strong interest) is favorable for the expansion of People's business in the future," he said, adding he hopes the sale will help Mycal carry on its restructuring plan smoothly.

Konami President Kagemasa Kozuki also told reporters that his company decided on the purchase as "it will have a great multiple effect" with its mainstay business.

Mycal said it has reduced the amount of net losses it expects for the group business in the current fiscal year, which ends Feb. 28, to 85 billion yen from the previously projected 105 billion yen in view of one-time gains from the sale of Mycal Finance's stake in People.

Mycal is also in talks with several companies to sell its stakes in Mycal Card Inc. and Japan Maintenance Co., both Osaka-based listed firms belonging to the Mycal group, company sources said.