Tepco to raise Y192bn from selling stakes
Tokyo Electric Power said it would raise about Y192bn ($2.5bn) by selling its stakes in KDDI, the telecoms carrier, and Kanto Natural Gas Development to help cover the costs of the Fukushima Daiichi nuclear power plant disaster.
Tepco, which faces an estimated Y4,700bn bill to cover compensation for those affected by the worst nuclear disaster in 25 years, as well as the cost of decommissioning the Fukushima plant, is selling the KDDI stake back to the telecoms group.
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KDDI said it would issue convertible bonds to help pay for acquiring Tepco’s stake, which is part of a Y250bn share back-back programme it unveiled on Monday. The telecoms group plans to buy back a total of 450,000 shares, or 10.59 per cent of its outstanding shares.
However, KDDI’s agreement to buy back its shares from Tepco provides the troubled utility with little relief.
Tepco received Y890bn in government aid earlier this month to help compensate victims of the nuclear disaster but still expects to make a Y600bn net loss for the year to March, 2012.
The sale of its KDDI stake will result in an extraordinary loss of Y35bn, which has already been factored into its full-year forecasts, Tepco said.
The company must compensate more than 100,000 people who have been forced to evacuate from areas around the Fukushima site, which the government estimates will cost Y4,700bn.
The cost of decommissioning the four ruined reactors at Fukushima, could well add another Y1,100bn to its bill, according to a government panel.
Tepco, which has already suffered a Y1,247bn loss in the year to March 2011 after the tsunami devastated its Fukushima nuclear facility, is under pressure to dispose of assets and cut costs.
The government has pledged to support the utility, in return for asset sales, estimated at Y707bn, and stringent cost cuts. A government panel has recommended that Tepco cut 7,400 jobs, or about 14 per cent of its workforce.
Tepco has also been told by the government to suspend shareholder dividends and reduce its payroll by 20 to 25 per cent.
The utility secured Y2,000bn in emergency bank loans immediately after the crisis struck. The banks have agreed to roll over loans and pre-disaster interest rates, but they have so far resisted calls to write off its debts of more than Y3,400bn.
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