The Seibu Railway Co. group is considering raising 160 billion yen in capital for a holding company that could be created in February to own Seibu Railway and a hotel and resort company, sources said Friday.
Purchasers of the new equity shares likely would be investment funds, including foreign ones, they added.
The capital injection would be aimed at giving the holding firm a more solid financial standing so its stock can be listed on a stock exchange.
A management reform panel comprising outside experts had recommended in its final report in March that some 200 billion yen in additional capital was needed to prop up the scandal-tainted conglomerate.
However, group executives decided to reduce the figure in order to reduce the ire of shareholders, who would see the per-share value of their holdings fall with the capital increase, according to the sources.
The group plunged into a crisis when it was found to have falsified financial statements, leading to Seibu Railway’s delisting from the Tokyo Stock Exchange last December.
The group may finalize a capital-raising plan within the month to be approved by Seibu Railway shareholders, the sources said.
A third-party entity is currently conducting an evaluation of the Seibu group’s assets to determine the merger ratio among the firms that would be placed under the holding company. An extraordinary shareholders’ meeting is expected to be held before the end of the year.
Seibu Railway said Wednesday the group would reconstruct itself under the holding company, scrapping an earlier plan laid out by the management reform panel for the railway to absorb Prince Hotels Inc. and Kokudo Corp., which has been the core of the group.
The hotel and resort company to be placed under the holding company would be created by a merger between Prince Hotels and Kokudo.
The absorption option had drawn fire from Seibu Railway shareholders, who complained there was no merit in absorbing Kokudo, which is in negative net worth, and noting the railway’s value would fall.
Some suspected the earlier plan was orchestrated by Mizuho Corporate Bank, a major Kokudo creditor, which feared Kokudo might collapse if left on its own.
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