Tepco Shares Decline After Report Company May Be Nationalized

Tokyo Electric Power Co. (9501) shares fell to the lowest in more than two months after the Yomiuri newspaper said the utility may be nationalized to avert collapse as it faces billions of dollars in costs to decommission the wrecked Fukushima nuclear station.

The government may acquire more than two-thirds of the company’s shares through its Nuclear Damage Liability Facilitation Fund, the Yomiuri said. The fund may invest 1 trillion yen ($12.8 billion) to acquire stock while banks may be asked to lend the same amount, the newspaper reported, citing an unidentified person familiar with the plan.

The utility known as Tepco said in a statement “there is no truth” to the report. “We will first work on cutting costs and securing funds,” it said.

Tepco fell 9.8 percent on the Tokyo Stock Exchange to close at 211 yen, the lowest since Oct. 6. Tepco is down 90 percent since the day before the March 11 quake and tsunami crippled its Fukushima Dai-Ichi nuclear station, causing 160,000 people to flee radiation fallout.

“We are considering all options,” Trade and Industry Minister Yukio Edano said today in Tokyo in response to a question on the Yomiuri report at a press conference.

The funds from the government and banks will help Tepco avoid insolvency and pay for dismantling and decommissioning the damaged reactors, as well as cover the cost of purchasing fuel to run its thermal plants, the Yomiuri said.

The government-backed fund may acquire securities including preferred stock and replace the company’s management, the Yomiuri reported. The fund will gain control after shareholders approve the plan at a meeting in June, it said.

The fund expects electricity prices to be raised as much as 10 percent next October and the company to restart reactors at one of its nuclear plants after April 2013, the Yomiuri said.

The government-backed fund aims to complete negotiations with banks by the end of March, the Yomiuri said.

To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editor responsible for this story: Peter Langan at plangan@bloomberg.net

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