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Daisue says Sanwa Bank agrees to write off Y62.4 billion
Tokyo, Sept 26 : Daisue Construction Co Ltd said on Tuesday that Sanwa Bank Ltd has tentatively agreed to forgive 62.4 billion yen ($581 million) in loans to the Osaka-based mid-size general contractor. Earlier on Tuesday, Daisue also reserved its earnings forecast for the current year. It now forecasts a parent net loss of 4.58 billion yen for the year to March 2001, against an earlier forecast of a net profit of 100 million yen. It lost 457 million yen last year.Daisue's announcement is the latest in a series of rescue pleas by Japanese builders mired in debt as a result of the collapse of the nation's asset-price bubble a decade ago. Earlier on Tuesday, Japan's top banking regulator said that creditor banks have largely agreed to forgive a huge swathe of debt owed by ailing construction company Hazama Corp In May, Hazama asked its creditor banks to forgive some 100 billion yen ($930 million) in loans. Analysts say that banks are reluctantly agreeing to the bailouts out of fear that the bankruptcy of majorcontractors could imperil Japan's economic recovery by taking down dozens of smaller sub-contractors. Daisue said that in addition to the debt forgiveness it is seeking from Sanwa Bank, it is asking other creditor banks to waive another 1.6 billion yen in loans. Sanwa Bank said in a separate statement on Tuesday that it is considering supporting Daisue's restructuring. Daisue had interest-bearing debts totalling 106.7 billion yen as of March 31, 2000. It plans to reduce the amount to below 30 billion yen by March 31, 2004 through bank debt forgiveness, the sale of assets and the third-party allocation of new shares, a company spokesman said. He said that the company will reduce its assets to 90 billion yen as of next March 31 from 170 billion yen a year earlier by selling real estate. Daisue also plans to raise two billion yen by issuing new shares next March 28, after reducing its capital to 3.88 billion yen on March 13, 2001 from 7.75 billion yen now. It said that the new shares will be purchased by Nichimen Corp, Nissho Iwai Corp, Sekisui House Ltd, Daikyo Inc and Recruit Cosmos Ltd. Under a three-year restructuring plan, the company hopes to quintuple its current profit to 2.4 billion yen in 2003/04 from an estimated 500 million yen for the current year, it said. The restructuring plans call for reducing the company's employee strength to 960 from 1,100 as of lastMarch. Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
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