Toa Steel calls it quits with 260 bil. yen in debts
Yomiuri Shimbun
Financially troubled Toa Steel Co., a subsidiary of NKK Corp., has decided to give up its rehabilitation efforts and liquidate its operations, sources said Thursday.
The decision was made at an extraordinary meeting of the board of directors on Wednesday, the sources said.
According to a private corporate credit research agency and other sources, the major electric furnace steelmaker is believed to have liabilities totaling about 260 billion yen, the most incurred by any manufacturer since World War II.
Toa Steel will become the third company listed on the First Section of the Tokyo Stock Exchange to fail this year, following Daido Concrete Co. and Okura and Co.
NKK will set up a wholly owned subsidiary around April of next year to take over the company's operating rights and facilities, as well as most of its employees, to continue production, the sources said.
Because of the liquidation, NKK is expected to take a special loss of billions of yen in the business year ending March 1999, the sources said.
Equipment at Toa Steel's plant in Kamisumachi, Ibaraki Prefecture, one of the firm's major plants, will either be sold to the new subsidiary or scrapped.
The funds from the equipment sales will be used to help repay Toa Steel's liabilities, the sources said. The remainder of the debts will be paid by NKK.
Toa Steel was established in 1987 by a merger of Azuma Steel and Toshin Steel. The firm was listed on the Tokyo Stock Exchange's First Section in 1988.
The company's earnings have deteriorated since the collapse of the bubble economy, as demand for steel products has declined and raw materials prices have risen.
The company spent about 128 billion yen to build the Kamisumachi plant in 1996. However, the rate of operations remained low, contributing to four straight fiscal years of recurring losses through the year ended March 1998.
At the end of 1997, the company's share price had fallen below face value, jeopardizing the firm's financial foundations.
This outfit left almost $2 billion in debt! Third major company to close doors this year.
.......Tokyo market down -163 in Friday afternoon trading.
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