Industrial Production Index Rises 3.1% In Dec

The Ministry of Economy, Trade and Industry announced that the industrial production index rose a seasonally adjusted 3.1% from the previous month to 94.6 (2005=100) in December. The increase was larger than the expected 2.9% expansion. For the 12-month period through December, the index rose 15.9% from a year earlier, marking the first rise in three years.

S&P's downgrades Japan to AA-

Yesterday Standard & Poor's lowered the long-term sovereign-debt rating of Japan by one notch to AA- from AA, the first downgrade for Japan since April 2002. The surprise downgrade has put Japan on a par with China, Taiwan, Saudi Arabia and Kuwait. S&P foresees Japan's fiscal deficit remaining at high levels for several years while it expressed a skeptical view on the ability of the current government by saying "In our opinion, the Democratic Party of Japan-led government lacks a coherent strategy to address the negative aspects of the country's debt dynamics." Moody's Investor Services said it was maintaining its own AA2 rating, but echoed worries over political gridlock.

The JGB market showed little change yesterday and today. 95% of outstanding JGBs are held by domestic institutional and retail investors, who are wary of long-term prospects but convinced that near-term credit risk is minimal, surely not more than that of AA-rated Spain.

Biotech Firm Hayashibara To Go For ADR Turnaround Process

Hayashibara Co., a Okayama-based biotechnology company, announced it will enter an alternative dispute resolution (ADR) process with more than 30 creditors regarding debt totaling as much as 140 billion yen. The firm, known for its sweeteners and anti-cancer researches, announced later that it was proud of its 28 billon yen in sales in 2010.

Advantage Partners In Talks Over Tokyo Star Bank

Advantage Partners LLP, a Tokyo-based large cap private equity firm, is reportedly in talks with a consortium of more than 10 Japanese and non-Japanese creditors with regard to the restructuring of its problematic investment in Tokyo Star Bank Ltd. The Yomiuri, Japan's largest newspaper, reported that the consortium has proposed to set up a new fund between the creditors and AP and the plan may be agreed on as early as this month. Under the restructuring plan, the bank consortium will take the helm, while AP may still retain minority voting rights. The share transfer price is expected to be (close to) zero. The consortium includes Lone Star, previous owner of Tokyo Star Bank, Shinsei Bank, Aozora Bank, Credit Agricole SA and the Development Bank of Japan.

In 2008, AP paid JPY 250 billion (USD 3 billion) to acquire Tokyo Star Bank through TOB. One-third of the total proceeds was funded by AP funds and the remaining two-thirds was funded by the banks. AP has used share dividends from Tokyo Star Bank to service interest payment. Recent losses booked by the Bank - though very modest at JPY 2.7 billion (USD 30 million) in FY ending March 2010 and JPY 3.1 billion (USD 37 million) for the succeeding 6 months period - has made it difficult for the bank to continue to pay dividends.

Ant Capital Exits Investment In Maruboshi

CMC Co., a listed manual-service provider, announced that it has acquired 100% of shares in Maruboshi Co., a PE-backed service provider of high-quality technical documents. CMC paid 1.68 billion yen. Maruboshi was acquired by Ant Capital Partners Co., Ltd., a Tokyo-based private equity firm, in 2008.

NEC, Lenobo In Talks On PC Joint Venture

NEC Corp., is in the final stages of negotiations with Chinese firm Lenovo Group Ltd. to join forces in the personal computer business through a joint venture, according to the Nikkei.

Condominium Market Starts To Recover

The Real Estate Economic Institute released a report of a 22.4% increase in the number of new condominiums put on the market in the Tokyo metropolitan area on the year to 44,535 units in 2010. It is the first increase in six years. The figure is projected to rise 12.3% to 50,000 units this year. After years of being stuck in the doldrums, Japan's condominium market is beginning to show signs of recovery, prompting property companies to resume aggressive condo. development in the metropolitan area.

Goldman Sachs To Boost Research Coverage of Japan

Goldman Sachs Japan Co., has been beefing up its research operations for Japanese equities, according to Nikkei. Goldman began hiring analysts late last year, taking on talent specializing in the insurance and transport industries in December. It started following individual Japanese internet and media companies this month, and is due to add an analyst for the machinery industry shortly. As a result, Goldman Sachs Japan's research team is expected to soon cover nearly 300 Japanese companies. These moves are interpreted as a sign that foreign investors' interest in Japanese stocks are recovering.

3 Foreign and 2 Domestic Companies On Short List For Bankrupted Takefuji

US fund Cerberus, US Buyout Shop TPG Capital, nonbank financial firm J Trust Co., PE-Backed Tokyo Star Bank and major South Korean consumer credit company A&P Financial are on the short list for Takefuji Corp's rehabilitation sponsor, according to Nikkei. They are expected to offer an acquisition price at the end of next month, with the sponsor likely decided on by March.

Valiant Partners Exits Shares In Pharmacy

Valiant Partners Co., a mid-sized private equity firm, announced that it has exited its investment in Hanshin Dispensing Pharmacy Co., a Kobe-based pharmacy firm. Valiant sold the shares to pharmaceutical wholesalers and the founders' own company. Hanshin went private in a MBO with Valiant in 2007.

Image Holdings To Go Private In MBO With Fund

Image Holdings Co., a listed mail order company announced that Image will go private with Mizuho Capital Partners, a Tokyo-based private equity firm. An investment entity set up for the buyout will launch a tender offer at 314 yen per share, a 26 (22)% premium over its 3 (6)-month average.

Goldman to Exit Accordia Golf

Accordia Golf Co. (2131) announced that Goldman Sachs will sell all its shares of the golf course operator. Through its group company, Goldman has been Accordia's largest shareholder with a stake of 44.7% - worth JPY 37 billion or USD 447 million at yesterday's market closing price. Accordia also announced the termination of its operational partnership agreement with Goldman. After purchasing a string of Japanese golf courses following the bubble burst in the 90s, Goldman took the golf course operator public in 2006. At the time of the IPO, Accordia was managing 10 golf courses for Goldman. Since then Accordia has acquired the bulk of the courses and currently manages just one on behalf of Goldman.

At today's opening, Accordia's stock price plunged as much as 13%. The sale price will be determined based on the closing price on a date between January 17th to 19th. Accordia will buy back its shares up to JPY 2 billon (USD 24 million).

PE-Backed REINS Sells Red Lobster Japan To Restaurant Operator

REINS International Inc., the Advantage Partners-backed food chain operator, announced it has sold all shares of Red Lobster Japan Co. Ltd., to CELUX Inc., a Tokyo-based operator of various kinds of restaurants. Financial terms are not disclosed. REINS purchased Red Lobster Japan in 2002 from retail giant Aeon Co.