The rehabilitation of Daiei Inc. entered a new stage Tuesday after its three major creditor banks told the embattled retail giant to seek help from the Industrial Revitalization Corp. of Japan, according to sources.
The proposal by UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank was conveyed to Daiei by Yoshiaki Kawamata, a senior corporate officer of UFJ Bank, they said.
But Daiei President Kunio Takagi said the company, saddled with interest-bearing debts of more than 1 trillion yen, has no intention of seeking the IRCJ’s assistance, the sources said.
“Daiei will revive itself on its own, and has no plans to utilize the IRCJ,” Takagi reportedly said.
The company has no plans to sell the Fukuoka Daiei Hawks professional baseball team, he said.
The three banks need Daiei’s consent before asking the IRCJ for help. Negotiations between Daiei and the three banks are expected to be difficult.
Although Daiei recently drafted a new rehabilitation plan and has been reluctant to seek IRCJ help, the three banks have concluded that Daiei’s plan is insufficient to turn its business around.
The new plan, presented to the three banks earlier in the week, features 250 billion yen in financial aid mainly from the banks and a fund of about 100 billion yen for capital investment from some investors.
Based on Tuesday’s proposal, the three banks have started negotiations with Daiei in a bid to work out another revival plan while trying to persuade the retailer to seek IRCJ assistance; its consent is necessary to apply for the rescue program.
The proposal is strongly supported by UFJ Bank, which is trying to clean up its loans to troubled large-lot corporate borrowers such as Daiei in the first half of the current fiscal year to catch up with other major banks in the disposal of problem loans.
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