KOBE – Daiei Inc. shareholders gave the nod Thursday to the ailing supermarket chain’s fresh three-year restructuring program featuring a 99 percent capital cut and a 520 billion yen bailout from its three main creditor banks.
The program is aimed at drastically boosting Daiei’s earnings and reducing its debts so it can resume dividend payments on common shares by the end of February 2005, the company said.
Under the program, Daiei will cut its capital to 500 million yen from the current 112 billion yen and use the proceeds to cover some of its massive losses.
It also calls on UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank to waive their claims on 170 billion yen in outstanding loans to Daiei and exchange their claims on 230 billion yen in loans to Daiei for stock under a debt-for-equity swap deal.
In the debt-for-equity swap, the banks’ claims on the loans will be swapped for 220 billion yen in preferred stock and 10 billion yen in common shares.
Daiei said it will accept executives from the three banks as new board members.
The new restructuring plan aims to boost Daiei’s group pretax profits to 54 billion yen at the end of February 2005 from 1.52 billion yen at the end of last February.
It also calls for cutting Daiei’s group interest-bearing debts, excluding debts owed by consumer credit service subsidiary Daiei OMC Inc., to 900 billion yen at the end of February 2005 from 1.8 trillion yen at the end of last August.
Daiei reported group net losses of 332.51 billion yen in the year that ended Feb. 28, a sharp reversal from the 45.89 billion yen in profits the previous year, due to heavy extraordinary losses from restructuring costs.
At a news conference after the shareholders’ meeting, Daiei President Kunio Takagi said the company will ask Daiei founder Isao Nakauchi to give up his 8.7 percent stake.
Nakauchi “bears responsibility as a major shareholder” for the company’s current condition, Takagi said.
Daiei may also ask Nakauchi to surrender some of his personal assets to help revive the company, he added.
The company asked Nakauchi’s second son, Tadashi Nakauchi, to give up his 40 percent stake in the Fukuoka Daiei Hawks baseball team, a Fukuoka-based Daiei unit, but the request was rejected, Takagi said, before suggesting that Daiei will continue in its efforts to persuade him.
Some shareholders called on Daiei to drop the baseball management business during the meeting, according to Takagi, but the company has no intention of doing so.
“Many of our customers and shareholders are Hawks fans,” he said, adding the team has positive effects, such as “giving our customers excitement.”
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