Idemitsu Kosan attempts to reduce debt

Japan's fourth largest oil refiner-distributor, Idemitsu Kosan Co. Ltd., plans to raise capital amounting to �30-40 billion to try to accelerate the reduction of its yawning debt, according to local media reports Monday. A company spokesman said the company, which is unlisted, would announce details on a planned capital increase on Tuesday but declined to comment further.


TOKYO�Japan's fourth largest oil refiner-distributor, Idemitsu Kosan Co. Ltd., plans to raise capital amounting to �30-40 billion to try to accelerate the reduction of its yawning debt, according to local media reports Monday. A company spokesman said the company, which is unlisted, would announce details on a planned capital increase on Tuesday but declined to comment further.

Idemitsu will boost capital through a third-party allocation of new shares to Sumitomo Bank Ltd., Sumitomo Trust & Banking Co. Ltd., and Tokai Bank Ltd., reported the Nihon Keizai Shimbun. Idemitsu, saddled with an estimated interest-bearing debt total of �1.15 trillion ($10.74 billion) as of Mar. 31, plans to issue preferred shares without voting rights, the newspaper said.

Idemitsu, with only �1 billion in capital, has made no capital increase since 1963.

In a struggling industry with low profit margins, Idemitsu stands out as having tried to survive while maintaining its independence, while other major refiners and wholesalers have chosen to merge or to form alliances with competing firms.

Idemitsu, Japan's fourth largest oil group by domestic sales, this month revised downward its profit estimate for the fiscal year ended Mar. 31 to �13 billion from an earlier forecast of �15 billion. That would still be an improvement over the �5.9 billion current profit it posted for the preceding period, due to a fall in interest payments after a �93.7 billion reduction in debt.

In April, Idemitsu said it had reached an agreement on establishing a �121 billion credit line with eight Japanese banks for the fiscal year ending in March 2001. The credit line's size compares with �118 billion for 1999-2000.

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