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The state-backed Industrial Revitalization Corp. of Japan said Tuesday it will stop preparatory procedures to help rebuild Daiei Inc. after the retailer’s president formally rejected calls by the IRCJ and major creditor banks for Daiei to seek the entity’s help, IRCJ sources said.

The IRCJ will remove an asset-assessment team from Daiei on Wednesday and refuse any aid applications from the retailer if it decides to seek help in the future, the sources said.

With the IRCJ’s statement, the focus has shifted to what action will be taken by Daiei’s major creditor banks.

The three major creditor banks — UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank — have repeatedly urged Daiei to turn to the IRCJ for help.

The banks might take measures such as canceling loans — a move that would lead to the legal liquidation of Daiei.

In a meeting with IRCJ President Atsushi Saito on Tuesday afternoon, Daiei President Kunio Takagi told the IRCJ that the company will seek private sector-led rehabilitation.

The meeting followed Monday’s decision by Daiei’s board to try to turn its business around without the support of the IRCJ.

The struggling retailer said Monday it will make a final decision on its plans after studying the results of next Monday’s bidding by private companies to assist in its rehabilitation, long after the Tuesday aid application deadline.

During the meeting with Saito, Takagi sought IRCJ’s understanding for the board’s decisions, which also include Daiei cooperating with the state-backed entity in assessing Daiei assets.

But Saito said the IRCJ will stop assessing Daiei’s assets if the retailer does not use the entity to rebuild its business.

“Generally speaking, it’s impossible to continue spending taxpayers’ money on asset assessment that has no purpose,” Saito said.

Takagi also met with the heads of creditor banks Tuesday night, but the details of their discussion were not immediately available.

The creditors have argued that the IRCJ is needed to ensure transparency during the rehabilitation process.

They are also worried that accepting Daiei’s plans, which would entail fresh financial assistance, could prompt lawsuits by their shareholders, angry over aid already given to Daiei in 2001 and 2002.

Daiei has been staunchly opposed to IRCJ involvement, partly because it could bring in rival retailers as sponsors and eventually put Daiei under their wings.

The IRCJ set a Tuesday deadline for the retailer to apply for support so the revival can be implemented smoothly, with sufficient time to buy creditor loans to Daiei.

Daiei has been letting four foreign financial institutions assess the quality of its assets and providing the information to the IRCJ.

The four firms, from which Daiei would also receive capital under its rehabilitation plan, are Deutsche Securities Ltd., Goldman Sachs Group Inc., Ripplewood Holdings LLC and Cerberus Group.

Meanwhile, financial sources have said that three groups of companies offering to help Daiei have begun final talks on forming a single team.

That team will join Monday’s bidding and is expected to emerge as the leading player in Daiei’s rehabilitation, the sources said.

The three groups are an alliance among Japanese trading house Marubeni Corp., Deutsche Securities and Cerberus, another involving Goldman Sachs and Wal-Mart Stores Inc., and a third combining Ripplewood and Mitsubishi Estate Co.

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