Struggling condominium builder Daikyo Inc. is seeking 176.5 billion yen worth of financial assistance from its creditors, according to the final draft of its rehabilitation plan obtained Monday.
The financial assistance includes about 146.5 billion yen in debt waivers by main creditor UFJ Bank and other financial institutions, the draft says.
Daikyo plans to withdraw from noncore operations such as resort and golf course development to concentrate on its mainstay business of building condominiums.
It plans to reduce its capital by 99 percent and use the funds to reduce losses. The capital reduction will make its shareholders share the burden of rebuilding the troubled company, sources said.
Daikyo President Jihei Yamazaki will remain in his post, they said. Yamazaki took the helm of the ailing company in June when predecessor Masaharu Hasegawa stepped down after seven years in the post.
Daikyo will decide Tuesday at a board of directors meeting to apply for support from the Industrial Revitalization Corp. of Japan, the sources said.
The IRCJ is charged with helping revive heavily indebted companies deemed otherwise viable by buying their loans held by banks other than their main creditor banks.
If the IRCJ assistance materializes, Daikyo will become the first company to use the public bailout mechanism among UFJ Bank’s large-lot borrowers with sagging businesses.
UFJ Bank, a core member of the UFJ Holdings Inc. group, which announced a merger plan with Mitsubishi Tokyo Financial Group Inc. in mid-August, is under pressure to accelerate a reduction in its problem loans to those large-lot borrowers.
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