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Tuesday, Sept. 2, 2003
IRCJ opts to bail out ailing Mitsui Mining
By TOMOKO OTAKE
The Industrial Revitalization Corp. of Japan announced Monday that it has decided to bail out Mitsui Mining Co. under its resuscitation program.
The decision means the state-backed corporate revival body now has four cases in hand.
The IRCJ had announced Thursday that it would try to bail out three other ailing firms: Tokyo condominium builder Dia Kensetsu Co., Kumamoto bus operator Kyushu Industrial Transportation Co. and the Usui department store in Koriyama, Fukushima Prefecture.
Mitsui Mining, a 92-year-old company that helped power Japanese industrial growth in the postwar era, fell into negative net growth at the end of fiscal 2002, after an auditor demanded that the firm reassess the value of real estate owned by its subsidiary, Mitsui Coal Mining Co.
Under the IRCJ's plan, the revival body and the firm's main creditor, Sumitomo Mitsui Banking Corp., will ask secondary creditors to forgive 171 billion yen in outstanding loans extended to Mitsui Mining and two of its subsidiaries.
The IRCJ will place the company under its control by acquiring a majority stake through a debt-for-equity deal, officials said.
IRCJ President Atsushi Saito defended the body's decision to support a company viewed by the public as being part of the nation's "old economy," stating that the company is still viable.
"When you look close enough, this company boasts extraordinary technologies, with engineers versed in aerodynamics and so forth," Saito told a news conference. "These people would be of huge value to the company if the company markets its expertise in Asia, for example."
While the IRCJ has yet to secure substantial debt-waiver pledges from all the creditors concerned, it must be relieved that a major creditor has already given the go-ahead in Mitsui Mining's case.
The New Energy and Industrial Technology Development Organization, which has 69.5 billion yen in outstanding loans to the Mitsui Mining and its subsidiary, has agreed to forgive a major portion of their loans. NEDO is an affiliate of the Ministry of Economy, Trade and Industry.
NEDO, which extended the loans to help the company pay off huge compensation demands tied to pollution-related lawsuits, has had its losses covered, putting up loan-loss reserves worth 56 billion yen in fiscal 2002.
In a case involving Kyushu Industrial Transportation Co., however, the IRCJ is expected to engage in tough negotiations with the transport ministry.
The Organization for Promoting Urban Development, a transport ministry affiliate, was involved in a land buyback scheme with the Kumamoto bus operator through which the affiliate offered 4.5 billion yen for a plot of land in 1995.