Struggling retail giant Daiei Inc. has worked out a new three-year rehabilitation package, including 300 billion yen in financial aid from three creditor banks, sources close to the plan said Saturday.
The package, already presented to UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank, also features a capital increase of 100 billion yen under a third-party share allotment and disposal of part of Daiei’s assets, the sources said.
It was not immediately known whether the three banks will accept the plan.
The new business program to begin in April calls for Daiei to issue new shares worth the 100 billion yen for allotment to investment funds, the sources said, adding that proceeds from the share issues will finance the opening of new outlets.
The planned asset disposal includes the sale of Daiei’s equity holdings in Recruit Co. and OMC Card Inc., the sources said.
Under the plan, Daiei will continue to own the Daiei Hawks baseball club because sales campaigns in the event of the team winning the championship would help bolster the retailer’s earnings, the sources said.
If the rescue package, the third of its kind for Daiei, is implemented successfully, Daiei’s total group interest-bearing debt would be slashed to between 400 billion yen and 500 billion yen by the end of March 2008 from more than 1 trillion yen as of the end of last February.
Daiei received 120 billion yen in financial assistance mainly from the creditor banks in 2001 and 520 billion yen in 2002.