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March 3, 2002
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Sunday
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Zilhaj 18, 1422
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Japanese contractor Sato Kogyo to file for bankruptcy
TOKYO, March 2: Ailing Japanese contractor Sato Kogyo Co. is set to file for bankruptcy early next week with liabilities of some $3.75 billion reports said on Saturday.
Sato Kogyo is at the final phase of discussions to file for (court-led protection under) the Corporate Rehabilitation Law within two days. The liabilities are expected to reach 500 billion yen, Jiji Press reported.
Tokyo-based Sato Kogyo has been holding final negotiations with Dai-Ichi Kangyo Bank (DKB) and other main creditors over filing for court-led protection, Kyodo News said, citing company sources.
Kyodo also said the liabilities are estimated around 500 billion yen.
But a possibility also still remains for Sato Kogyo to rebuild with support from such companies as general contractor Hazama Corp. under the fast-track Civil Corporate Revival Law, which allows company management to stay on board to map out and proceed with the court-mandated rehabilitation plan, the sources told Kyodo.
Mizuho Financial Group, of which DKB is a part, has determined that Sato Kogyo’s reconstruction plans were not feasible, given the company’s heavy interest payments on debt exceeding 300 billion yen on a consolidated basis, the Nihon Keizai Shimbun newspaper said without citing sources.
Sato Kogyo’s rebuilding plan ... called for reducing its parent-only debt totalling 290 billion yen at the end of March 1999 to 140 billion yen by fiscal 2008, the financial daily said.
Although the plan had been proceeding as forecast, Sato Kogyo recently started to see orders plummet due to growing credit concerns. As a result, the company’s revenue for this fiscal year is expected to drop significantly, the newspaper said.
DKB and other creditor banks waived about 110 billion yen in loans to the contractor in the year to March 1999 in a bid to rescue the company, a DKB spokesman said.
The spokesman, however, declined to comment on the reports of DKB giving up help to Sato Kogyo.
Sato Kogyo officials could not be reached for immediate comment.—AFP
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