Seeking capital, Idemitsu Kosan considers share listing
Japan's fourth largest oil refiner-distributor Idemitsu Kosan Co. Ltd. is considering a share listing. 'We are thinking of listing our shares, although we do not have a target date,' company president Akira Idemitsu told reporters in Tokyo, adding that the firm will set up a working committee on the subject. Recently it was announced Idemitsu Kosan plans to raise its capital to �30 billion ($280 million) from �1 billion, moving to cut its huge debt to survive tougher competition.
TOKYO�Japan's fourth largest oil refiner and distributor, Idemitsu Kosan Co. Ltd., is considering a share listing. "We are thinking of listing our shares, although we do not have a target date," company president Akira Idemitsu told reporters in Tokyo, adding the firm will set up a working committee on the subject. Idemitsu Kosan recently announced plans to raise its capital to �30 billion ($280 million) from �1 billion, moving to cut its huge debt to survive tougher competition (OGJ Online, May 22, 2000).
As of Mar. 31, Idemitsu had an estimated �1.15 trillion in interest-bearing debt due to heavy borrowing from banks. The company earlier said that it needed more capital to make it easier to raise funds. To achieve that, it will conduct a third-party allocation of 2.9 million new shares at �10,000 each to Sumitomo Bank Ltd., Sumitomo Trust & Banking Co. Ltd., Tokai Bank Ltd., Tokio Marine & Fire Insurance Co. Ltd., and Sumitomo Life Insurance. Payment for the preferred shares�which carry no voting rights�is due June 1, Idemitsu said.
The company added that it may issue additional preferred shares, as several other financial institutions are considering buying into the company. "The global move has been to raise funds by directly tapping the market. We have decided to adapt to these changes," Akira Idemitsu said.
Analysts tentatively welcomed the move, saying it would hopefully lead to greater transparency. "Idemitsu has not exactly been renowned in the past for the transparency of its accounting. This will change, particularly if it does decide to go public, giving us a much clearer picture of the exact state of its financial health," pointed out one industry analyst.
The high price of crude oil on global markets and the inability of Japanese oil companies to fully pass on the increase to customers have sharply eroded refiners' recent profit margins.
The capital increase will be Idemitsu's first in 37 years. In an industry struggling with low profit margins, the company has chosen to maintain its independence to survive.
Pres. Idemitsu reiterated on Tuesday the company was not thinking of a merger.
Idemitsu has 720,000 b/d of refining capacity in five refineries across Japan. The firm said in April that it had reached agreement to establish a �121 billion credit line with eight Japanese banks for its current fiscal year, up from �118 billion for the year just ended. The company will announce its parent and, for the first time, group earnings on June 6.