ID :
99740
Wed, 01/13/2010 - 08:10
Auther :
Shortlink :
https://www.oananews.org//node/99740
The shortlink copeid
Gov't eyes 600 bil. yen credit line as JAL nears bankruptcy+
TOKYO, Jan. 12 Kyodo - A government-backed turnaround body and the state-owned Development Bank of Japan are planning to extend Japan Airlines Corp. a credit line totaling 600 billion yen to avert severe cash drain as they finalize a court-led rehabilitation plan for the carrier, sources close to the matter said Tuesday.
The government also effectively clinched consent from JAL's key commercial
creditor banks to support the airline's turnaround efforts after it files for
bankruptcy protection, in a major boost after the company's shares were dumped
in a massive sell-off.
Meanwhile, JAL announced it had narrowly succeeded in securing approval from
over two-thirds of its retirees for drastic cuts in pension benefits, clearing
a key hurdle for the cash-strapped carrier to qualify for access to public
funds.
As the company's share price plummeted to an all-time low, the government
emphasized it would make all-out efforts to ensure Japan's top airline would be
rehabilitated without any interruption to its key operations.
''The most important thing is that all of those concerned reach a consensus and
cooperate in ensuring JAL's smooth operation and its recovery in the future,''
Prime Minister Yukio Hatoyama told reporters.
Earlier in the day, Hatoyama also said ''shareholders have a certain
responsibility (for the deterioration in company conditions)'' and indicated
JAL's delisting may be inevitable during the restructuring process.
JAL shares remained untraded for almost the entire day on the Tokyo Stock
Exchange as a flood of sell orders sent its share price to a record low of 37
yen, plunging by its daily limit of 30 yen, or almost 45 percent.
Its shares sank after reports spread that the state-backed Enterprise
Turnaround Initiative Corp. of Japan. is planning to delist JAL to clarify
shareholder responsibility by seeking a 100 percent equity reduction.
Seiji Maehara, the minister of land, infrastructure, transport and tourism,
held a meeting with the executives of JAL's commercial creditor banks -- Mizuho
Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking
Corp. -- where they gave their tentative approval for the bankruptcy option,
people with knowledge of the talks said.
The turnaround body is expected to announce a prepackaged restructuring scheme
as early as next Tuesday at the same time when JAL would file for bankruptcy
proceedings under the Corporate Rehabilitation Law.
Maehara emphasized that the government will ensure JAL keeps flying, but added
it will likely ask other airlines to provide air transportation if JAL's
operations are interrupted.
The three commercial creditor banks, which will also be asked to waive about
350 billion yen in debt together with regional banks, had earlier sought an
out-of-court restructuring on concerns they would incur losses on their
holdings in JAL's preferred shares.
But the sources said they basically accepted the bankruptcy option since the
airline would need access to massive government-guaranteed funds that only ETIC
can provide to turn the company around.
In the newly planned 600 billion yen credit lines, ETIC plans to provide 400
billion and the DBJ, JAL's biggest credit bank, will extend 200 billion yen.
Half of the DBJ's portion will be guaranteed by the state-backed entity, the
sources said.
ETIC plans to separately invest 300 billion yen in JAL through the use of
public funds, they said.
On pension reform, JAL said it obtained consent from 5,991 retirees, or 67
percent, of 8,936 retirees to cut over 30 percent of their pension benefits as
of Tuesday afternoon. The company has already received a 91.7 percent approval
from over 15,700 current employees for a pension cut of around 53 percent.
The turnaround body had initially considered dissolving JAL's corporate pension
fund if the carrier failed to obtain approval for the pension cuts. But with
the company reaching the two-thirds threshold, ETIC is likely to stay with the
current proposed level of pension cuts.
The turnaround body also plans to hold a meeting with 77-year-old Kazuo
Inamori, honorary chairman of Kyocera Corp., on Wednesday as the entity and the
government eye appointing him to become JAL's chief executive officer during
the rehabilitation process.
Separately, American Airlines Inc. said the same day it and other key oneworld
alliance members are ready to offer $2 billion in commercial benefits to JAL as
they seek to keep the Japanese carrier within their global airline alliance.
American also said the oneworld group, jointly with U.S. investment fund TPG
Inc. beefed up their financial offer for JAL, now proposing an investment up to
$1.4 billion in an increase of $300 million from an earlier offer.
American Airlines, a unit of AMR Corp., sweetened its proposal as reports
spread that ETIC is planning a business tie-up between JAL and rival Delta Air
Lines Inc., which would entail the defection of a key Japanese carrier to the
global SkyTeam alliance.
==Kyodo
The government also effectively clinched consent from JAL's key commercial
creditor banks to support the airline's turnaround efforts after it files for
bankruptcy protection, in a major boost after the company's shares were dumped
in a massive sell-off.
Meanwhile, JAL announced it had narrowly succeeded in securing approval from
over two-thirds of its retirees for drastic cuts in pension benefits, clearing
a key hurdle for the cash-strapped carrier to qualify for access to public
funds.
As the company's share price plummeted to an all-time low, the government
emphasized it would make all-out efforts to ensure Japan's top airline would be
rehabilitated without any interruption to its key operations.
''The most important thing is that all of those concerned reach a consensus and
cooperate in ensuring JAL's smooth operation and its recovery in the future,''
Prime Minister Yukio Hatoyama told reporters.
Earlier in the day, Hatoyama also said ''shareholders have a certain
responsibility (for the deterioration in company conditions)'' and indicated
JAL's delisting may be inevitable during the restructuring process.
JAL shares remained untraded for almost the entire day on the Tokyo Stock
Exchange as a flood of sell orders sent its share price to a record low of 37
yen, plunging by its daily limit of 30 yen, or almost 45 percent.
Its shares sank after reports spread that the state-backed Enterprise
Turnaround Initiative Corp. of Japan. is planning to delist JAL to clarify
shareholder responsibility by seeking a 100 percent equity reduction.
Seiji Maehara, the minister of land, infrastructure, transport and tourism,
held a meeting with the executives of JAL's commercial creditor banks -- Mizuho
Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking
Corp. -- where they gave their tentative approval for the bankruptcy option,
people with knowledge of the talks said.
The turnaround body is expected to announce a prepackaged restructuring scheme
as early as next Tuesday at the same time when JAL would file for bankruptcy
proceedings under the Corporate Rehabilitation Law.
Maehara emphasized that the government will ensure JAL keeps flying, but added
it will likely ask other airlines to provide air transportation if JAL's
operations are interrupted.
The three commercial creditor banks, which will also be asked to waive about
350 billion yen in debt together with regional banks, had earlier sought an
out-of-court restructuring on concerns they would incur losses on their
holdings in JAL's preferred shares.
But the sources said they basically accepted the bankruptcy option since the
airline would need access to massive government-guaranteed funds that only ETIC
can provide to turn the company around.
In the newly planned 600 billion yen credit lines, ETIC plans to provide 400
billion and the DBJ, JAL's biggest credit bank, will extend 200 billion yen.
Half of the DBJ's portion will be guaranteed by the state-backed entity, the
sources said.
ETIC plans to separately invest 300 billion yen in JAL through the use of
public funds, they said.
On pension reform, JAL said it obtained consent from 5,991 retirees, or 67
percent, of 8,936 retirees to cut over 30 percent of their pension benefits as
of Tuesday afternoon. The company has already received a 91.7 percent approval
from over 15,700 current employees for a pension cut of around 53 percent.
The turnaround body had initially considered dissolving JAL's corporate pension
fund if the carrier failed to obtain approval for the pension cuts. But with
the company reaching the two-thirds threshold, ETIC is likely to stay with the
current proposed level of pension cuts.
The turnaround body also plans to hold a meeting with 77-year-old Kazuo
Inamori, honorary chairman of Kyocera Corp., on Wednesday as the entity and the
government eye appointing him to become JAL's chief executive officer during
the rehabilitation process.
Separately, American Airlines Inc. said the same day it and other key oneworld
alliance members are ready to offer $2 billion in commercial benefits to JAL as
they seek to keep the Japanese carrier within their global airline alliance.
American also said the oneworld group, jointly with U.S. investment fund TPG
Inc. beefed up their financial offer for JAL, now proposing an investment up to
$1.4 billion in an increase of $300 million from an earlier offer.
American Airlines, a unit of AMR Corp., sweetened its proposal as reports
spread that ETIC is planning a business tie-up between JAL and rival Delta Air
Lines Inc., which would entail the defection of a key Japanese carrier to the
global SkyTeam alliance.
==Kyodo
