Wal-Mart dropped from Daiei sponsor shortlist
By Mariko Sanchanta in Tokyo
Published: January 21 2005 11:49 | Last updated: January 21 2005 11:49
Wal-Mart has been eliminated from a shortlist of consortia bidding to become the lead investor in the rehabilitation of Daiei, whose restructuring is currently in the hands of the state-backed turnaround body, the Industrial Revitalisation Corporation of Japan.
ADVERTISEMENT
But people close to the deal say the world’s leading retailer - as well as foreign private equity funds - could still play a role in the revival of the embattled Japanese retailer.
The IRCJ has selected consortia led by Aeon, Japan’s leading retailer, Marubeni, the trading company, and Kiacon, a private equity fund, as “sponsors” - the body’s term for investors - to help turn around Daiei, according to Japanese reports. Eliminated were groups led by Wal-Mart as well as by Japan’s second largest retailer Ito-Yokado, US grain trader Cargill and investment fund Ripplewood.
But people familiar with the situation say the rejected companies can appeal the decision or join the three remaining consortia.
“It came down to who would keep as many jobs and stores as possible,” said one person familiar with the negotiations. A Wal-Mart spokeswoman in Japan said the retailer was still interested in Daiei.
Aeon has been the most active of Japan’s food retailers in trying to fend off competition from foreign groups, introducing low prices and western business methods, such as direct sourcing and superstore formats.
Aeon, which rescued struggling rival Mycal three years ago, has teamed up with Kyocera, the ceramics and electronic parts manufacturer, in its bid to sponsor Daiei. If accepted, Aeon would take a majority stake in Daiei.
The IRCJ last month approved a restructuring plan for Daiei , the country’s third-largest retailer, bringing to an end months of haggling with the struggling group’s creditor banks.
Daiei is considered the epitome of Japan’s “zombie” companies - kept alive for years by loyal banks willing to roll over unrepayable debts. Last year, the retailer fought a losing battle to persuade creditors to approve yet another rehabilitation plan that would have kept it independent.
In line with previous IRCJ restructuring plans, common shareholders will suffer a 99.6 per cent equity write-down. The IRCJ will take a 33.4 per cent stake in the company through a Y50bn debt-for-equity swap, while the sponsor is expected to also take a one-third stake in the retailer.
A sponsor is set to be selected by the end of the current fiscal year, in March.
