Daiichi Chuo Secures Much-Needed Investment from Creditors
- Business & Finance
Financially-troubled Japanese dry bulk shipping company Daiichi Chuo Kisen Kaisha (DCKK) has entered into investment agreements with its main creditors, the company said.
The creditors include 14 vessel owners and shipyards, referred to as maritime cluster members, one of which inked a loan deal with DCKK on the same day.
As disclosed, the total amount of investment is JPY 2.29 billion (USD 20.3 million) and the total amount of loan to be obtained is JPY 390 million (USD 3.4 million)
Daiichi has been looking for an investor to help the company repay its debts and stabilize its business after it had filed for restructuring September last year.
The decision was reached due to the deteriorating economic situation experienced by the group amid worsening market conditions that saw the company accrue USD 1 billion in liabilities.
Following a review process of the several proposals received from the company’s sponsor candidates, the company determined that “receiving financial funding (including investments) from the maritime cluster is the best method to promptly and surely reorganize our business and to maximize repayments to our creditors.”
Daiichi added that it would now set out a provision in its rehabilitation plan to be submitted to the Tokyo District Court to acquire all existing shares without consideration.
“After the confirmation of the rehabilitation plan, DCKK will acquire and cancel the said shares, and will issue new shares through third-party allocation to which the maritime cluster will subscribe to, becoming DCKK’s new shareholder,” the company went on to say.
The deal has been sealed after Tokyo District Court granted the shipping company an extension of the deadline for the submission of its proposed rehabilitation plan.
Daiichi announced its rehabilitation proceedings in October 2015 and was given until February 3, 2016 to submit the plan, a deadline which has been pushed until March 31st.
The company asked for the extension as it needed more time to examine whether its plan had the potential of getting confirmed at the creditors’ meeting.