Japan Post Holdings Co. will settle ¥700 billion of pension liabilities to bolster its balance sheet before an initial public offering, according to a source with knowledge of the situation.
The government-owned company plans to raise ¥1.3 trillion by selling shares in subsidiary Japan Post Bank Co. to the banking unit, said the source, who asked not to be identified because he isn't authorized to speak about the matter.
The unit will use surplus capital to fund the transaction, the source said.
With the proceeds, Japan Post Holdings will offset ¥700 billion of pensions owed to former employees on its balance sheet, according to the source. It will inject the remaining ¥600 billion into its mail delivery unit to upgrade facilities and improve operations, the source said.
The banking, insurance and postal giant is seeking to restructure its debts and capital to attract investors for the IPO, the Nikkei newspaper reported earlier Monday. Japan Post Tsuyoshi Nagano declined to comment.