Transport chief Chikage Ogi expressed reservations Friday about an industry revival plan announced the day before by the government’s Industrial Revitalization Corp. of Japan.
Ogi said it will be difficult for the Organization for Promoting Urban Development, a transport ministry affiliate, to unconditionally give up part of its credit claims to Kyushu Industrial Transportation Co., one of the first three debt-ridden firms picked by the IRCJ for rescue.
The IRCJ has requested that the urban development organization give up its claims on the 6,100 sq. meters of land purchased from the Kumamoto Prefecture-based bus operator in 1995. The buying price was 4.5 billion yen, according to Ogi.
The purchase, based on a 10-year contract, was aimed at helping Kyushu Industrial Transportation to develop commercial facilities on the land. The bus company is supposed to buy back the land in 2005.
However, the firm has not yet undertaken the project and there are no prospects it will repurchase the land, Ogi told a regularly scheduled news conference.
She said Kyushu Industrial Transportation must first explain clearly why the development project has been shelved, how the money from the land deal has been spent and where the responsibility lies before it is granted a debt waiver.
“There may be many who would want to rush to the IRCJ for a debt waiver, but without clearly presenting to the people the circumstances and the sequence of events, I cannot consent” to the debt-forgiveness plan, Ogi said.
She said she suspects that the bus operator may have used the money to pay off debts to other lenders.
Meanwhile, Sadakazu Tanigaki, state minister in charge of industrial revitalization, said in a separate news conference that he and Ogi agreed to have sufficient discussions with relevant parties on the debt waiver.
On Thursday, Makoto Taketoshi, director general of the transport ministry’s City and Regional Development Bureau, issued a statement that the ministry will deal appropriately with the issue by Oct. 15, when the IRCJ is scheduled to purchase credits from the bus company’s creditors.
The IRCJ was established in April to help revive heavily indebted companies deemed otherwise viable.
Companies seeking rehabilitation under the IRCJ and their main creditor banks must jointly submit rehabilitation plans.
The companies will call on their creditors to waive claims on part of their debt in return for conducting large personnel cutbacks and retiring their management teams.