Copyright 2000 The Yomiuri Shimbun
The Daily Yomiuri (Tokyo)
May
29, 2000, Monday
SECTION:
Pg. 1
LENGTH:
459 words
HEADLINE:
Debt-ridden Seiyo Corp. likely to be liquidated
BYLINE:
Yomiuri
BODY:
Seiyo Corp., a real estate developer in the Saison retail group, whose debts excessed its assets by 463.2 billion yen as of March 31, is likely to undergo so-called special liquidation, according to a summary of financial results obtained Saturday by The Yomiuri Shimbun.
A fall in real estate prices caused its debts to rise 150 percent from the 299 billion yen it owed the previous fiscal year, sources close to the company said.
Special liquidation is a process whereby the dissolution of a company is approved by a general meeting of stockholders, the firm's assets are disposed of and its debts are settled under the direction of a court. The process is considered flexible as a
liquidator
chosen by the company concerned negotiates debt disposal with creditors.
Saison group member companies, which include Seibu Department Stores Ltd., and the firm's main bank--Dai-Ichi Kangyo Bank--concluded it would be difficult for them to support Seiyo during reconstruction. Thus, they have started final negotiations on liquidating the firm, the source said.
Saison group is likely to take on about 90 billion yen of Seiyo's debts, and banks, including Dai-Ichi Kangyo, will cover about 370 billion yen worth when the final liquidation plan is drawn up next month, the sources said.
Seiyo is funded almost entirely by the Saison group.
Seiyo invested in large commercial facilities and resort development during the bubble economy of the 1980s. When the bubble burst, the company's investment policy backfired and it found itself heavily indebted and unable to reconstruct itself.
According to industry observers, of all the firms in the Saison group, Seiyo was the one most in need of reconstruction.
According to the summary of the firm's financial results obtained by The Yomiuri Shimbun, Seiyo's total assets in the business year that ended March dropped to 52 billion yen, down 99.2 billion yen from the previous year. Total debts, meanwhile, were 515.2 billion yen, meaning that its debts exceeded its assets by 463.2 billion yen.
The Saison group initially set an end-of-March deadline for coming up with a plan to dispose of Seiyo. However, as reaching a consensus of opinion proved to be difficult, it asked Seiyo's banks to delay the deadline until the end of June.
As the summary of the financial results revealed that Seiyo's debts had grown, Seibu Department Stores and Dai-Ichi Kangyo Bank decided that voluntary liquidation was the most desirable route to take as it would prevent a loss in asset value and reduce their share of the burden, the sources said.
Bank of Tokyo Mitsubishi and other banks also are calling for the quick disposal of Seiyo and have all agreed to the liquidation, the sources said.