Debt-swamped Seibu Department Stores Ltd. is expected to become the first company to seek rehabilitation under the planned government-backed industrial revival body, government and company sources said Wednesday.

The government will step up efforts to make arrangements for the planned body to purchase outstanding loans to Seibu from some 30 financial institutions that are not Seibu’s main creditors, the sources said.

On Tuesday, Seibu requested that its six main creditor banks, led by Mizuho Corporate Bank, and Credit Saison Co., a member of the Seibu group of companies, provide 230 billion yen in financial aid.

Mizuho Corporate Bank and the other five were asked to forgive a combined 220 billion yen in loans, while Credit Saison was asked to exchange its loans to Seibu for Seibu shares, the sources said.

But some of the six are opposing the proposal to give up credits equivalent to 68 percent of the portion of their loan amounts that are not covered by collateral put up by Seibu, they said.

Rough going is expected at a meeting of creditors slated for Jan. 21, the sources said.

The industrial revival entity, expected to be launched this spring, is intended to help revive struggling companies with viable reconstruction prospects by purchasing loans extended by banks other than their main banks.

If the creditors endorse the debt-waiver requests, Seibu will enter specific talks with the preparatory office for the new government body, the sources said.

The Nihon Keizai Shimbun reported in Wednesday morning that Seibu and Mizuho plan to ask the revival entity to buy 200 billion yen in loans extended to Seibu by the 30 creditors other than the seven core creditors.

The revival body will examine the appropriateness of buying the 30 lenders’ outstanding loans after it examines the quality of the loans.

The government will submit a bill to set up the industrial revival body to a 150-day Diet session convening Jan. 20.

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.