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The state-backed Industrial Revitalization Corp. of Japan said Wednesday it has decided to bail out the country’s No. 2 cosmetics maker, Kanebo Ltd., using 366 billion yen in public money.

The struggling company had initially sought the government’s help for its mainstay cosmetics business only.

It later determined, however, that its operations as a whole need a boost if the firm is to survive.

“I would like to repeat my apology for causing great troubles for shareholders, customers and business partners by changing the revival scheme several times,” Kanebo President Takashi Hoashi told a news conference in Tokyo.

Kanebo also announced that Akiyoshi Nakajima, 53, will replace Hoashi as president later this month. Nakajima oversees Kanebo’s sales of cosmetics at department stores.

The company said earlier that Hoashi and all other board members would step down to take responsibility for the confusion that had been caused.

Under the bailout plan unveiled Wednesday, the company will spin off its cosmetics unit into a separate firm. The IRCJ will inject 366 billion yen into the new company by buying an 86 percent stake in it and extending 280 billion yen in loans.

Kanebo will take the remaining 14 percent stake.

In this transaction, scheduled to be conducted in early May, Kanebo will receive 380 billion yen in proceeds from the new company in exchange for the cosmetics unit.

Kanebo will use the proceeds to pare down its 530 billion yen in interest-bearing debts.

The IRCJ’s bailout package is seen as representing a disappointment for Kanebo’s management, which expected the government body to pay more for its cosmetics unit than Kao Corp.

Kao was reportedly ready to pitch in 400 billion yen in a botched acquisition.

Kanebo’s initial revival plan using the IRCJ, announced soon after the surprise collapse of talks with Kao last month, was supposed to be relatively painless.

Yet it was forced to change the plan amid public anger over the firm’s apparent reluctance to accept responsibility for its plight, along with growing doubts over whether Kanebo could salvage itself after parting with its only money-making division.

In the latest plan, the IRCJ said it will also help turn around Kanebo’s loss-making units, such as those that produce textiles, foods, and health and toiletry goods.

Kanebo said that it will take a 200 billion yen charge for the current fiscal year to restructure its unprofitable operations, including its synthetic fiber business.

Meanwhile, the firm’s main bank, Sumitomo Mitsui Banking Corp., and Kanebo’s other creditors, numbering about 100, will be asked to waive a large portion of debts still left over, sources said.

The IRCJ was set up last year to restructure crippled companies after relieving banks of their bad loans.

Although it has access to up to 10 trillion yen in government-backed bonds, experienced staff, and only one year left to choose the companies it wants to turn around, it had yet to pick a single large company that would set the pattern for future cases.