|Kyodo News International, Tokyo|
Knight Ridder/Tribune Business News
Mar. 18, 2005 - TOKYO -- The management reform panel of the scandal-tainted Seibu Railway group will propose selling money-losing assets worth 200 billion yen, including five hotels of its Prince Hotels chain, to improve the group's finances by repaying debts with the proceeds, informed sources said Friday.
The panel also seeks a 200 billion yen capital increase by Seibu Railway Co. to shore up the railway operator's finances, according to the sources.
The proposals are at the center of a draft reform program mapped out by a panel of external consultants chaired by Ken Moroi, an adviser to Taiheiyo Cement Corp. The panel aims to implement the program in the next three years, they said.
While trying to reduce the group's interest-bearing debts of about 1.4 trillion yen to below 1 trillion yen through the asset sale, the panel will also seek help from Mizuho Corporate Bank and other major creditors for the capital increase at Seibu Railway, the sources said.
The panel is expected to hold an extraordinary meeting later in the day and will make a formal request to the Seibu group's major creditors, they said.
The group plans to restructure after finalizing the reform program next Friday, the sources said.
The five hotels that will be sold are Yokohama Prince Hotel, Takaragaike Prince Hotel in Kyoto, Aso Prince Hotel in Kumamoto Prefecture, Nango Prince Hotel in Miyazaki Prefecture, and Toronto Prince Hotel in Canada.
The reform program also calls for the sale of loss-making sports facilities such as a golf course in Kumamoto Prefecture, the sources said.
Under an interim reform program released by the panel in January, the panel proposed that the Seibu group either sell or withdraw from about 40 unprofitable facilities. The group owns about 160 facilities nationwide.
The interim plan called on Seibu Railway to merge with a spinoff of the group's core firm Kokudo Corp. and absorb the Prince Hotels chain.
In May, the Seibu group will reshuffle its management with Takashi Goto, a former vice president of Mizuho Corporate Bank, assuming the presidency of Seibu Railway. The new management will be responsible for finalizing the proposed reform measures.
The group has been mired in a scandal involving the falsification of shareholder information in Seibu Railway's financial statements.
Yoshiaki Tsutsumi, former head of the Seibu group, was arrested in early March on suspicion of involvement in the falsification of the documents and insider trading of Seibu Railway shares.
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