TOKYO, April 11 (Reuters) - Korean consumer lender A&P Financial has won the right to buy failed Japanese consumer lender Takefuji Corp, beating out rivals including Cerberus and TPG Capital.
Seoul-based A&P Financial will start negotiations with Takefuji's court-appointed trustee to buy Takefuji, and both parties aim to reach an agreement by the end of this month, Takefuji said on Monday in a statement on its website.
Takefuji has been looking for an investor to keep it in business after failing in September with about $5 billion in debts, crippled by a 2006 legal ruling forcing it and other consumer lenders to repay past interest and setting a new cap on lending rates.
A&P Financial was chosen out of field of bidders that included Cerberus Capital Management, TPG and Japan's J Trust, according to sources.
J Trust, a Japanese financial services company, dropped out of the race on Friday, saying it was not certain that the bidding would be handled in a fair and transparent manner.
Another bidder, Tokyo Star Bank, did not submit its bid on the closing day for the final bid on March 31, sources told Reuters.
J Trust also cited a lack of confidentiality in the process as another reason for its withdrawal. But the company on Friday disclosed its bidding price of 31 billion yen ($366 million) and its plans which included taking on 700 employees.
'Disclosing their bid and offer is very unusual and J Trust's offer price shows how serious J Trust was,' said a person involved in the bidding process, adding that J Trust's offer price was higher than others'.
Bidders were requested to present the price based on future Takefuji assets estimated for September this year, sources told Reuters on Monday.
Takefuji's outstanding loans stood around 75 billion yen as of last October, Takefuji's trustee told reporters in March. The trustee was not immediately available for comment on Monday.
OVERCHARGED INTEREST REPAYMENTS
A Korean newspaper had reported in January that the sale was worth between 800 billion won (62.5 billion yen) and 1 trillion won. A&P in a statement on Monday declined to disclose its bidding price but said it was lower than 800 billion won.
The money to be injected by A&P Financial is expected to be used to rebuild Takefuji's lending business. It will also likely be spent on repaying overcharged interest to customers, though the amount to be shouldered by investors is not yet clear.
At the time of Takefuji's bankruptcy filing, Eiichi Obata, the court-appointed trustee, had estimated Takefuji could face up to 2 trillion yen in claims from borrowers for the return of overcharged interest.
Rebuilding Takefuji presents a tough task due to the cap on lending rates and the burden of repaying overcharged interest, which has darkened the outlook for the overall consumer lending industry. However, some sources have said much of Takefuji's debt and overcharged interest repayments would likely be forgiven in the rehabilitation process.
Takefuji struggled to raise money while it was still in business because it did not have backing from Japanese banks. By contrast, rivals Acom Co and Promise Co are backed by major banks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, respectively.
But Acom and Promise are also facing tough times. In March, Moody's Investors Service, citing the potential impact of interest repayments on earnings, cut Promise's credit rating to B1 from Ba1, both of which are non-investment grades. It cut Acom to Ba3, a non-investment grade, from Baa3, one notch above the non-investment level.
Takefuji's outstanding corporate bonds total about 89 billion yen, of which 59 billion yen worth is denominated in U.S. dollars and euros, Obata told reporters in March, adding that Takefuji did not have bank borrowings. ($1 = 84.720 Japanese Yen)
(Additional reporting by Ju-min Park in Seoul; Editing by Chris Gallagher) Keywords: TAKEFUJI/BIDDING (junko.fujita@thomsonreuters.com)(813-6441-1840)(Reuters Messaging: If you have a query or comment on this story, send an email to) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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