Daiei wants debt erased
Advertiser Staff and News Services
KOBE, Japan — Daiei Inc. announced today that it has asked its biggest lenders to wipe out $3.16 billion in debt and preferred stock in a major restructuring designed to keep Japan's second-largest retailer afloat.
Daiei also said it plans to cut 5,000 group jobs over the next three years, sell assets and close 50 money-losing stores.
No mention was made of the retailer's Hawai'i stores.
Earlier this week, Japan's leading economic daily, the Nihon Keizai newspaper, reported that Daiei would sell its four Hawai'i supermarkets as part of the plan to reduce its $17.5 billion debt. At the time, a Daiei spokesman said the company was not considering a withdrawal from Hawai'i.
Officials with Honolulu-based The Daiei (USA) Inc. could not be reached for comment last night.
Daiei said UFJ Holdings Inc., Mizuho Holdings Inc. and Sumitomo Mitsui Banking Corp. will consider the retailer's request for debt-forgiveness "positively," raising hopes that the nation's most-indebted retailer won't be forced into bankruptcy.
Daiei Inc. started negotiating last week with banks on a three-year restructuring plan to reduce debt and to close unprofitable businesses.
Daiei employs 100,000 people nationwide, including nearly 70,000 part-time workers.
Daiei's fortunes have suffered a reversal of fate during the nation's downturn that began more than 10 years ago.
The company was once widely respected here as an innovator introducing competitive pricing and Western-style large-scale stores — moving away from the mom- and-pop stores that used to dominate Japanese retail.
Daiei, based in the western port city of Kobe, was founded in 1957 by Isao Nakauchi, a charismatic businessman who exercised enormous influence on economic policy for years. It also owns a professional baseball team, the Fukuoka Daiei Hawks, managed by home-run king Sadaharu Oh.
But Daiei's image has been seriously overshadowed by the coming of rivals and even cheaper discount shops. The retailer also overexpanded when times were good.
Selling its Hawai'i stores would bring to an end 30 years of merchandising its unusual blend of discount goods and Japanese food selections for Island residents.
The company's first Hawai'i store, at Pearlridge Center, was also its first outside Japan. It offered more than 1,000 items, a little more than half from Japan. It later added stores in Honolulu, Kailua, Pearl City and Waipahu, and closed the Pearlridge store.
Last year, local retail analysts said they believed that Daiei would divest the Hawai'i stores, whether they were profitable or not.
Selling the four Hawai'i stores, each about 100,000 square feet on leasehold land, would generate little cash. But getting rid of the stores would reduce expenses and allow the company to better focus on operations at home, analysts said.
Bloomberg News Service and The Associated Press contributed to this report.
