Seibu negotiates $1.9m banking lifeline
Japanese department store chain sees debts dropped
February 25 2003
Japanese department store retailer Seibu has persuaded bankers to drop debts totalling 220 billion yen, around $1.9bn.
The scale of the problems facing the Japanese retailer reflects the downturn in the country’s economy which has seen consumers switch their spending to discount operators.
Banking corporations Mizuho and Mitsubishi both said that their subsidiaries would waive debts. In return Seibu, which has interest-bearing debts of about 580 billion yen, has embarked on a restructuring plan which will see 3,700 full and part-time jobs cut over five years, with seven underperforming stores from of its 24-strong chain to close if their performance cannot be improved.
Japanese banks have shown themselves to be willing to write off corporate debt rather than risk a further loss in confidence in the economy through major corporate bankruptcies. Supermarket operator Daiei benefited from a $4n rescue package last year.
In the case of Seibu, the banks are also keen to support a deal which would see Seibu integrate its operations with rival retailer Sogo, which declared bankruptcy in July 2000.
