Struggling Kanebo Ltd. faced a storm of questions and criticism Thursday during an extraordinary meeting of shareholders aimed at raising new capital and changing its auditing corporation.

In line with a revival plan announced in May, Kanebo will seek to improve its financial standing by obtaining more funding from its main bank, Sumitomo Mitsui Banking Corp., and the state-backed Industrial Revitalization Corp. of Japan.

Kanebo also plans to issue 30 billion yen worth of preferred shares to Sumitomo Mitsui Banking and 20 billion yen worth of deferred shares to IRCJ.

Kanebo, which is undergoing management rehabilitation under the auspices of IRCJ, also hopes to change its auditor to Deloitte Touche Tohmatsu from ChuoAoyama PricewaterhouseCoopers, company officials said. The previous auditor had reportedly engaged in dubious practices.

At Thursday’s meeting, shareholders approved the 50 billion yen fundraising and auditor change.

But management faced a barrage of questions and complaints about the revival plan.

One stockholder rapped the company for shifting the blame to shareholders for its financial woes, even though they have little say in actual management.

Another questioned the feasibility of Kanebo’s plan to make drugs and other consumer products the company’s core businesses.

In early May, Kanebo spun off its mainline cosmetics business as part of its rehabilitation effort.

Kanebo President Akiyoshi Nakajima, who chaired the meeting, and other executives said they will strive to carry out the revival plan so the company can resume dividend payments in the future.

The Tokyo-based maker of textiles, pharmaceuticals, food and other consumer products plans to call for the application of the Industrial Revitalization Law shortly to effect the planned capital shakeup, company officials said.

After receiving approval from the authorities, Kanebo will hold a board of directors meeting to approve a 99.7 percent capital reduction from 31.3 billion yen to 100 million yen. It then hopes to get funding from the two financial institutions in late September, the officials said.

To overcome its financial plight, Kanebo on May 31 unveiled a revival plan featuring a reduction in its core business and a large debt waiver, aiming to eliminate its negative net worth by the end of the current fiscal year.

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