Kanebo Ltd. shareholders approved a plan Tuesday to spin off the firm’s mainstay cosmetics business to pay off its mounting debts.

Despite the turmoil surrounding the company’s search for a turnaround strategy, the day’s extraordinary shareholders’ meeting went smoothly, though one investor lashed out at management.

“I am disappointed and angry to see such a prestigious company in this situation,” the investor said.

The focus of the meeting was the spinoff of Kanebo’s cosmetics unit, in which the state-backed Industrial Revitalization Corp. of Japan will hold an 86 percent stake.

Kanebo will receive 380 billion yen from the sale and use the bulk of the proceeds to pare down its debts, which exceed 500 billion yen.

The IRCJ will also assist Kanebo’s remaining businesses, including a loss-making fabrics division.

In a surprise move, Kanebo said in February it would ditch the plan to sell its cosmetic business to household products giant Kao Corp. and instead seek the help of IRCJ.

But the 366 billion yen extended by IRCJ to the new company was well short of the more than 400 billion yen Kao was reportedly ready to pay.

During the shareholders’ meeting, Kanebo sought to gain investors’ acceptance and said the reason behind its decision stemmed from the ownership issue.

The company stated that, unlike an outright sale to Kao, in which Kanebo would have lost ownership of the cosmetics business, it will retain a 14 percent stake in the new firm.

New board members were elected at the meeting, including Akiyoshi Nakajima, who was later chosen at a board meeting as the new president.

All eight members of the current board, including President Takashi Hoashi, have resigned. They have also given up their retirement bonuses as a gesture of taking responsibility for the firm’s recent problems.

Angry shouts and harsh accusation were absent from the shareholders’ meeting, though investors were upset by the plight of the once-dominant player in the industry.

“I should have sold the shares during the bubble economy period,” said one 64-year-old woman from Tokyo’s Suginami Ward who identified herself only by her family name, Yazawa.

Selling the cosmetics business to Kao would have been a better idea, she said, adding that she still holds out hope for a company revival under IRCJ.

Bought about 50 years ago, Kanebo shares were what her parents left for her “in case of need,” she said. “I hope the shares will not became (worthless) pieces of paper.” “The company stretched too far under the ‘Great Kanebo’ slogan,” said Toshio Kubo, 75, from Kokubunji in western Tokyo.

“I cannot sell at this price. I will wait until it is turned around.” said Kubo, who owns some 13,000 shares.

Chishiki named president

Kanebo said later the same day that it has named Kenji Chishiki president of the new company, scheduled to begin operations May 7 after acquiring Kanebo’s cosmetics business.

The 41-year-old Kobe native is credited with successfully launching the Lissage brand of makeup items, a track record that prompted the IRCJ to push for his nomination.

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