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Wednesday, March 15, 2006

How will delisting impact Livedoor?


Staff writer

The Tokyo Stock Exchange will delist Livedoor Co. on April 14, depriving the Internet company of the ability to raise capital on the market. How will the move affect Livedoor? Here are some questions and answers that address the firm's possible fate:

What will happen to Livedoor until it is delisted?

Livedoor was transferred Tuesday to a TSE category for companies scheduled for delisting. Shareholders will be able to sell Livedoor shares until April 13. The firm will be delisted the next day.

What happens if shareholders do not sell their shares by then?

Livedoor has not declared bankruptcy, so Livedoor's delisting does not make the shares worthless. It means shareholders will not be able to sell their shares on the stock market, but they still have a say in the company's management and the right to dividends.

How is Livedoor trying to turn itself around?

Livedoor appears to be seeking support from other companies. Livedoor President Kozo Hiramatsu told a news conference Monday that several companies have already offered financial help.

"One of the options is to join hands with a partner, but there is also the option to rebuild the company by ourselves," Hiramatsu said.

Hiramatsu also said Livedoor will focus on its three core businesses: its Internet portal, financial services and business software.

What are the chances Livedoor can recover on its own?

That remains to be seen. After Livedoor is delisted on Apr. 14, it will not be able to raise capital through sales of stock on the market. But the company appears financially stable for the time being.

Livedoor said it had about 62 billion yen in cash at the end of December, and Hiramatsu has said the company is not in danger of running out of cash in the near future.

But didn't the arrest and indictment of the former Livedoor executives severely damage the company?

Definitely. Livedoor's share price plunged from 696 yen in January, when prosecutors raided the firm several days before founder Takafumi Horie's arrest, to 76 yen at the close of trade Tuesday, when the indictments of Horie and other former Livedoor executives were announced.

Companies advertising on the Livedoor portal have scrambled to pull them, and group firms are distancing themselves from Livedoor.

It has been reported that many of Livedoor's individual shareholders are preparing to file lawsuits against the company. How would that affect it?

If Livedoor has to compensate stockholders for their losses, the company's cash may evaporate, putting it in severe financial straits.

In addition to individual shareholders, Fuji Television Network Inc., which owns 12.75 percent of Livedoor stock, says it plans to sue Livedoor for damages.

Last May, Fuji TV bought Livedoor's shares for a total of 44 billion yen. But the nosedive in Livedoor stock over the past two months has caused Fuji TV's latent losses to balloon. They are estimated at about 35 billion yen.

What will happen to Livedoor's subsidiaries?

Some are trying to sever ties with the parent, while others seem to want to remain in the group.

Livedoor Marketing Co., which will also be delisted from the market in April, used-car dealer Livedoor Auto Co. and Dynacity Corp. are among the companies hoping to cut ties with Livedoor.

Mail-order company Cecile Co., which is struggling to get back on its feet, says it will remain in the group.



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The Japan Times

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