As part of its rebuilding efforts, debt-saddled supermarket chain Daiei Inc. filed with the government Tuesday for tax breaks and other preferential treatment under the industrial rehabilitation law, government officials said.
Daiei hopes that its filing will lend credibility and transparency to its plan to rehabilitate under a three-year restructuring program. The resulting tax deductions are estimated to exceed 600 million yen.
Earlier in the day, Daiei management approved a plan to ask the Ministry of Economy, Trade and Industry to grant the parent company and a subsidiary the preferential treatment in an extraordinary meeting of directors.
METI plans to approve the application in April after scrutinizing the restructuring plan, which was submitted the same day, the officials said.
The plan features 520 billion yen in financial assistance from its three main creditor banks — UFJ Bank, Sumitomo Mitsui Banking Corp. and Fuji Bank.
The government has so far allowed treatment under the law in 122 cases, including Nissan Motor Co. If it approves Daiei’s request, it would mark the first time for the law to be used for a company that has already received a debt waiver from creditors.
The major Japanese automaker has rebuilt itself via a capital tieup with Renault SA of France.
METI’s scrutiny of the Daiei plan will focus on the feasibility of the retailer boosting its productivity in three years and strengthening its finances to allow it to slash massive interest-bearing debts.
With the application of the law, the government will grant Daiei tax breaks on registration of capital increases and real-estate sales.
It will also make it easier for Daiei to take out loans at low interest from the state-run Development Bank of Japan and receive employment subsidies from the Health, Labor and Welfare Ministry.
The law, enacted in 1999 and effective through the end of March 2003, is designed to improve Japan’s industrial competitiveness and provide tax breaks for corporations that shed excess capacity.
On Feb. 27, Daiei announced a new restructuring program designed to reduce its group interest-bearing debt from 1.8 trillion yen at the end of August to 900 billion yen in three years.
It also calls on the banks to conduct a one-for-10 equity split-back deal involving 120 billion yen of Daiei preferred shares purchased last year. , and for Daiei to cut its capital by 99 percent, affecting common shares.
17 yen dividend for 7-11
Seven-Eleven Japan Co. said Tuesday it plans to pay a yearend dividend of 17 yen per share for the last business year, up from the earlier planned 16 yen announced in October.
The company will pay higher dividends as it is expected to achieve its earnings projection for the full year, it said.
With the revision, the full-year dividend will total 33 yen per share as the company already paid an interim dividend of 16 yen per share for the half-year to October.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.