Daikyo Inc. and its main creditor, UFJ Bank, are planning to seek support from the government’s Industrial Revitalization Corp. of Japan, possibly this month, to rehabilitate the struggling condominium builder, sources said Tuesday.
UFJ and other creditors will provide around 180 billion yen worth of financial assistance to Daikyo, mainly in the form of debt waivers, and the builder will concentrate on selling condominiums, its main line of business, the sources said.
Daikyo will withdraw from businesses unrelated to condominiums, including golf course and resort development, they said.
With IRCJ’s help, UFJ Bank’s loans to Daikyo would be normalized, and the bank would be able to accelerate its bad-loan cleanup.
However, in a statement released Tuesday, the company said it has no plan to seek help from IRCJ.
“The main lender, UFJ Bank, has not called on us for the utilization of IRCJ either,” the statement said.
Daikyo said the company is considering various measures for speeding up its current restructuring plan, but it has not yet decided anything.
Daikyo fell into financial difficulties following the bursting of the bubble economy in the early 1990s.
The Tokyo-based company received a rescue package in 2002 of 470 billion yen from UFJ Bank, a member of the UFJ Holdings Inc. group, and other financial institutions, as well as government recognition as being entitled to tax breaks under the Law on Special Measures for Rehabilitation.
As of the end of March, Daikyo had 485.9 billion yen in consolidated interest-bearing debts, more than it had in sales.
Masaharu Hasegawa, who headed Daikyo for seven years from 1997, was replaced by Jihei Yamazaki in June. Hasegawa and Yamazaki were sent to Daikyo by Sanwa Bank, a predecessor of UFJ Bank.
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