Misawa Homes Co. said Wednesday it will reorganize its group structure under a new holding firm to be launched in August.

Under the plan, the ailing house builder will fully privatize three sales subsidiaries operating in Tokyo and other major cities, and merge two building material producers within the group.

Company officials said the move is expected to slash costs by 18 billion yen in the 2005 business year by winnowing out overlapping personnel and expenses. Cost-cutting measures worth 41.5 billion yen have already been announced.

Despite a 35 billion yen debt waiver in March from its main creditor, UFJ Bank, the firm is struggling under heavy debts and a sluggish housing market in major cities.

Misawa said it will also promote dealership consolidation in the Tokyo metropolitan area. The group reorganization will take place along with job cuts, it said.

Misawa will reduce staff levels at the parent firm to around 750 by the end of March 2006 from 1,288 at the end of March 2002. It will also halve the number of board directors to eight.

The group workforce will be reduced to roughly 8,000 by the end of March 2006 from 9,804 as of last March, it said.

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