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Creditors Push Japanese Retailer to Take Bailout Offer - 2004-08-27

One of Japan's largest supermarket and department store chains, Daiei, is in talks with its creditors, which could determine whether it survives.

UFJ Bank has led two bailouts of the retailer in the past three years. The bank's president, Takamune Okihara, says Daiei's creditors want the ailing retailer to seek a government bailout. Mr. Okihara says he hopes to convince Daiei to accept assistance from the government-backed Industrial Revitalization Corporation rather than begging banks to cut the its $10 billion debt in half.

But Daiei President Kunio Takagi is resisting a government handout. Mr. Takagi says if its main lenders cooperate and come to Daiei's aid again, it will be able to cut its debt in half by February - a year earlier than the original target.

While Japan's third-largest retailer negotiates with its creditors, America's Wal-Mart Stores, reportedly is considering investing in Daiei. Wal-Mart, the world's biggest retailer, is already the top shareholder in Daiei's competitor, Seiyu.

In the finance industry, UFJ has reversed an earlier position and now is looking at a merger bid from Sumitomo Mitsui Financial Group. UFJ earlier had rebuffed that offer, saying it wanted to go ahead with the merger with Mitsubishi Tokyo, Japan's largest bank. But Sumitomo Mitsui has since sweetened the pot, causing UFJ to reconsider.

Japan's Finance Ministry says the country's trade surplus rose more than 44 percent in July from a year earlier. That is the 13th consecutive monthly increase.

In a preliminary report, the ministry says exports grew more than 14 percent while imports rose more than eight percent. Most significantly, the trade surplus with the rest of Asia climbed nearly 63 percent.

Foreign cell-phone makers have not had much success in Japan. But that may be about to change.

Motorola and NTT DoCoMo have announced a deal to jointly develop a handset for Japanese businessmen on the run. They say the new third-generation cellular phone will allow Japanese traveling abroad to make calls. It will also be able to connect to the Internet.

DoCoMo is Japan's provider of cell-phone services, while Motorola, a U.S. company, is the world's second largest cell-phone manufacturer.