News Archive : Japan Real Estate

Friday, November 11, 2005

Seibu Goes With Cerberus, Nikko Principal; Nixes Tsutsumi Brothers' Bid

Friday, November 11, 2005
Seibu Nixes Tender Offer Proposal In Reorganization Plan

TOKYO (Nikkei)--Seibu Railway Co. announced a group reorganization plan Thursday under which it officially rejected a proposed tender offer by the founding family.

The proposal "is not feasible and we cannot adopt it," President Takashi Goto said.

Yuji Tsutsumi -- brother of former Kokudo Corp. Chairman Yoshiaki Tsutsumi -- and half-brother Seiji Tsutsumi had proposed a tender offer under which they had sought to purchase Seibu Railway's shares for 1,150 yen to 1,300 yen.

Goto notified Yuji Tsutsumi and Seiji Tsutsumi of Seibu Railway's decision in writing Thursday, citing factors including the absence of a specific operational plan.

Seibu Railway's group reorganization plan instead entails the establishment of a new holding company called Seibu Holdings Inc., which would include railway and hotel subsidiaries under its umbrella. The holding company will be capitalized at 50 billion yen, with Seibu Railway Chairman Naoki Hirano and Goto keeping their positions at the new firm.

The holding company will target an operating profit of 55 billion yen in fiscal 2007, up roughly 40 billion yen from fiscal 2004.

Kokudo and Seibu Railway will hold special shareholders meetings Nov. 28 and Dec. 21, respectively, to approve the group reorganization plan.

U.S. investment fund Cerberus Group is to take a roughly 30% stake, while Nikko Principal Investments Japan Ltd. will have a 15% share. Kokudo's holding company, the yet-to-be-created NW Corp., will take a 15% interest, with the remaining shares to be held by Seibu Railway shareholders. Cerberus and Nikko Principal agreed to their investments after assessing Seibu Railway's stock at 919 yen a share.

Yoshiaki Tsutsumi will not be a shareholder in Seibu Holdings. But his indirect holdings through NW Corp. will total around 5%, Goto said.

(The Nihon Keizai Shimbun Friday morning edition)

Thursday, November 10, 2005
Seibu To Get Y133bn Capital From Cerberus, Nikko Principal

TOKYO (Dow Jones)--Japanese railway and hotel business conglomerate Seibu Railway Co. group has reached an agreement on a financing deal with sponsors and will receive Y133.1 billion in fresh capital from U.S. investment fund Cerberus Group and Nikko Principal Investments Japan.

As a result, Cerberus will hold 30% of the voting rights in the newly launched Seibu group entity to be called Seibu Holdings Inc. Nikko Principal Investments Japan, a merchant banking unit of Nikko Cordial Corp. is expected to hold 15% voting rights in the new Seibu entity.

Cerberus will be investing Y94.1 billion in the Seibu group, while Nikko Principal will inject Y47.0 billion.

The group will reorganize its operations by dividing them into railway and hotel business subsidiaries - Seibu Railway Co. and Prince Hotels Inc.

Shares of the group's core company, Kokudo Corp., will be swapped for an equal number of shares in a new entity, NW Corp.

Mark Neporent, chief operating officer for Cerberus Asia Capital Management, told a news conference the restructuring plan is "the best way to maximize the enterprise value of the Seibu group."

Seibu Railway President Takashi Goto said, by implementing the reform measures, Seibu Holdings, the holding company, will aim to relist its shares "in three to four years."

Goto said that, as far as he knows, other companies interested in Seibu such as Goldman Sachs Group Inc. aren't planning a hostile bid for Seibu shares. Seibu received investment offers from some 20 investors.

Goto added that the former head of the group Yoshiaki Tsutsumi still has a 36% stake in Kokudo, but that will be converted to a stake of just over 15% in Seibu Holdings after the share swap.

Over the next three years the Seibu group plans capital spending totaling Y160 billion. Some Y72 billion will be invested in the railway and related operations and Y63 billion in the hotel and resort operations.

The group will target an operating profit of Y55 billion in the fiscal year ending March 2008, up from Y14.9 billion in the year ended last March. By tying up other companies, Seibu hopes to boost that operating profit to Y65 billion in the future.