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.