Cerberus Capital Management LP, the biggest shareholder of Seibu Holdings Inc., should get the cooperation of Mizuho Financial Group Inc. (8411) to narrow differences with the hotel operator, said Hirofumi Gomi, a former candidate for the Seibu board.
The key is to start talks with Seibu’s largest private lender and “try to find some middle ground,” Gomi said in an interview on July 9. Cerberus last month failed in its bid to have Gomi and seven other candidates elected to Seibu’s board. The New York-based fund in an e-mailed response declined to comment on whether it was planning to talk to Mizuho.
Cerberus has said it aims to improve governance and profitability at the Tokorozawa, Japan-based company before it sells shares to the public. Seibu President Takashi Goto, who used to work at Mizuho, said in April he won’t offer “any concessions” to Cerberus.
“If Cerberus wants to keep doing business in Japan then they need to fit in with Japanese culture,” Gomi, a former commissioner of Japan’s Financial Services Agency, said. “It’ll be very difficult for Cerberus to move forward with a medium-term plan by holding its shares and exercising its rights if it doesn’t have the main bank’s cooperation.”
Gomi said he’s not planning to be part of any future board proposal with Cerberus as they need to consider a new route.
Cerberus announced a tender offer in March to boost its stake in Seibu and proposed three outside directors to the board. The following month it more than tripled the amount of shares it was offering to buy and increased its proposal of board members to eight. The private-equity company raised its stake to 35.5 percent from 32.4 percent after the tender offer.
Mizuho, Japan’s third-biggest lender by market value, is Seibu’s biggest private creditor, with 126 billion yen ($1.3 billion) outstanding, according to the hotel operator’s shareholder meeting announcement booklet released June 4. The government-owned Development Bank of Japan Inc. was the largest creditor with 144 billion yen, it said.
Seibu said it met with Cerberus, the Development Bank of Japan and Norinchukin Bank last week to discuss a way to “move forward.”