Urban Corp.'s convertible bond sale is being examined by the Tokyo Stock Exchange to determine if the collapsed property developer withheld information from investors, according to the bourse.
Urban, which declared the nation's largest bankruptcy this year, said June 26 it planned to sell ¥30 billion in convertible bonds to French bank BNP Paribas SA to secure operating funds and stabilize its finances.
The Hiroshima-based company failed to say it also entered derivatives transactions that funneled funds back to BNP Paribas. This was revealed in Urban's Aug. 13 bankruptcy statement.
"Urban's disclosure is unsuitable," said Satoshi Futagi, a spokesman for the TSE. "Listed firms must follow timely disclosure."
Urban spokesman Nobuaki Terashiki confirmed the TSE had cautioned the company.
Shares of Urban surged almost 20 percent July 10, the day the property developer and BNP Paribas confirmed the sale of bonds, which were convertible into equity. The stock has lost almost all its value since then.
Urban paid BNP Paribas ¥30 billion July 11, the same amount raised from the convertible bond sale. In return, Urban was entitled to a daily fee from the bank that was tied to its share price. Since the share price fell, Urban got as little as ¥9 billion from the transaction, the Nikkei news service reported.