Bloomberg News

Tepco Faces Delisting as Negotiations on Government Aid Stall

February 13, 2012

Feb. 13 (Bloomberg) -- Tokyo Electric Power Co. faces delisting from the city’s stock exchange as negotiations with the government stalled over a bailout that would prevent a collapse of the utility after the Fukushima nuclear disaster.

The owner of the crippled Fukushima nuclear plant must file a quarterly financial report to regulators by tomorrow under Japanese law. The shares may be struck from the Tokyo Stock Exchange a month after being placed under supervision if no quarterly report is filed, according to bourse rules.

The utility known as Tepco in December requested 689.4 billion yen ($8.9 billion) in further aid after raising its estimate for compensation payments to those affected by the disaster to 1.7 trillion yen and is resisting giving up control to the government. Yukio Edano, the trade and industry minister, said on Feb. 10 government support isn’t intended to help the company meet the deadline and it needs to show it’s committed to becoming “a newborn Tepco.”

“Tepco was supposed to offset losses from compensation payments with money from the government,” Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co., said. “Once that arrangement stops working, Tepco may slip into insolvency when it closes its books.”

Tepco hasn’t decided when to report its earnings to the exchange, Atsushi Sugiyama, a spokesman for the utility, said today. It will be difficult to file the results for the nine months ended Dec. 31 before Edano approves the aid request, he said. Tepco is aware of the deadline tomorrow, he said.

‘Newborn’ Tepco

Edano will meet Tepco President Toshio Nishizawa to discuss the aid at 12:10 p.m., the ministry of trade and industry said today in an emailed statement.

Tepco is in talks with banks and the government’s Nuclear Damage Liability Facilitation Fund to raise loans, two people with knowledge of the negotiations said in December. The banks will lend 1 trillion yen each to Tepco and the same amount to the fund, which would use the money to buy the utility’s shares, the people said.

The utility’s management is resisting giving up control to the government and wants to keep the ratio of the fund’s voting rights to less than 50 percent, one of the people said. The government may obtain more than one-thirds of voting rights to have power of veto, the Asahi newspaper reported on Feb. 10.

Tepco won Edano’s approval for support totaling 891 billion yen in November after the company pledged to cut jobs and costs. The company requested the extra aid on Dec. 27 after the government revised compensation guidelines and its policy on evacuation zones.

The company said in November it expects a loss of 600 billion yen for the year March, bringing losses from the crisis to 1.85 trillion yen. Tepco reported a full-year loss of 1.25 trillion yen last fiscal year.

About 160,000 people fled radiation as three reactors went into meltdown at the Fukushima Dai-Ichi plant after the March 11 earthquake and tsunami.

--Editors: Aaron Sheldrick, Baldave Singh

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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