Struggling giant retailer Daiei Inc. will cut its interest-bearing liabilities by 200 billion yen from 350 billion yen on an unconsolidated basis by selling real estate and stock holdings, sources said Thursday.
The debt reduction is intended to improve its financial health and increase its attractiveness to Aeon Co. and U.S. retailer Wal-Mart Stores Inc., which are being wooed for possible business tieup, the sources said.
The reduction plan may also allow Daiei to strike a deal with four lenders to refinance the 140 billion yen debt it owes to the Industrial Revitalization Corp. of Japan, they said.
The company, which operates a national supermarket chain, and the lenders are expected to strike a loan agreement Friday, the sources said.
Led by Sumitomo Mitsui Banking Corp. and Sumitomo Trust & Banking Co., the lenders had said they would provide the loans on condition that Daiei took steps to reduce its huge debts.
Of the 140 billion yen Daiei is planning to borrow, Sumitomo Mitsui and Sumitomo Trust are expected to lend 50 billion yen each, while a Nomura Holdings Inc. unit will likely lend 30 billion yen, with Shinsei Bank lending some 10 billion yen, the sources said. The loans are expected to be short-term, until next May.
Daiei is considering selling part of its controlling stake in OMC Card Inc., a major profit earner in its group of firms, its stake in Maruetsu Inc., a midsize supermarket chain, and 39 real estate properties.
Daiei’s stake in OMC Card stood at 53 percent on Feb. 28, while its stake in Maruetsu comes to 38 percent.
The refinancing will enable the IRCJ, the state-backed corporate rescuer, to end its assistance measures to Daiei. Last month, the IRCJ sold all of its Daiei shares to major trading house Marubeni Corp.
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