Seibu Department Stores Ltd. won approval Tuesday from shareholders on a new share issuance and a debt-for-equity swap, paving the way for its management rehabilitation program.
Under the plan approved at an extraordinary shareholders' meeting, Seibu will raise about 10 billion yen by reducing capital by roughly 95 percent and issuing new shares through third-party allotment.
Sogo Inc. will buy new shares worth about 5 billion yen. It will become Seibu's largest shareholder after integrating its business operations with Seibu, possibly in June.
A Mizuho Financial Group Inc. unit and the Development Bank of Japan will each purchase 1.6 billion yen worth of shares, Seibu Railway Co. will buy 1 billion yen, Itochu Corp. 700 million yen and NTT Data Corp. 100 million yen.
Seibu will receive a debt-for-equity swap worth 9.8 billion yen from the corporate group led by Credit Saison Co., an affiliated consumer credit company.
Creditors formally approved Seibu's bailout program in February, promising a total of 230 billion yen in financial support. , including 220 billion yen in debt waivers.
The troubled department store chain expects to eliminate its negative net worth by the end of February 2005.
Under the 62-month rehabilitation plan, retroactive to January, Seibu will cut 3,000 full-time jobs to bring its total workforce to 5,700 by the end of February 2008. It will also either liquidate or sell 14 affiliated companies.
Seibu will also close four of its 21 outlets in August.