Mitsui Construction Co. said Thursday its nine main creditors have agreed to waive 141.97 billion yen in claims on outstanding loans to the financially troubled construction company.
The agreement was reached after Sakura Bank and other financial institutions belonging to the Mitsui group decided to waive 126.18 billion yen, or almost 90 percent of the total amount requested by Mitsui Construction.
In the Mitsui group, Sakura will forgive 87.38 billion yen, Chuo Mitsui Trust & Banking Co. 27.1 billion yen, Mitsui Mutual Life Insurance Co. 5.73 billion yen and Mitsui Marine & Fire Insurance Co. 2.9 billion yen.
The agreement also covers a third-party allotment of new shares worth 20.4 billion yen to 12 concerns, which includes 3.52 billion yen to be allocated to Mitsui Marine & Fire.
The debt-waiver scheme is part of Mitsui Construction's rehabilitation plan.
The midsize construction company initially asked creditors to waive 163 billion yen but met opposition from some creditors.
Mitsui Construction then reduced the request for loan forgiveness to around 142 billion yen while asking creditors to buy 20.5 billion yen in new shares in a private placement.
As a result of the agreement, Mitsui Construction will register an extraordinary profit of 141.97 billion yen, which will be used to cover 170 billion yen in losses in fiscal 2000, which ends Saturday.
Kazuhiro Inamura will resign as president of Mitsui Construction after a general meeting of shareholders in June, company officials said.
The Tokyo-based contractor posted a negative net worth of 71.5 billion yen on a parent-only basis in the April-September period of 2000.
Following aggressive investment during the bubble economy of the 1980s, Mitsui Construction suffered from the disposal of bad loans to affiliated companies and latent losses on real estate.
Under its five-year rehabilitation plan, Mitsui Construction plans to trim its workforce by 10 percent to 2,900 by the end of March 2003 and to streamline its 42 major affiliates to 28.