Corporate turnaround lawyer Kazuhiko Shimokobe said he accepted an offer from Japan’s Prime Minister Yoshihiko Noda to take the job of chairman of Tokyo Electric Power Co. and start restructuring the company at the heart of the Fukushima nuclear disaster.
Shimokobe, 64, heads the state-backed fund set up to handle the bailout of the utility known as Tepco.
“Prime Minister Noda said it’s going to be a tough job but he would like me to become chairman of the new Tepco,” Shimokobe told reporters after the meeting last night in Tokyo. “I told him that I will make my utmost efforts so the new Tepco can take the first step and I will accept the request.”
Shimokobe is a former adviser at the Industrial Revitalization Corporation of Japan, which handled the restructuring of Kanebo Ltd. and the sale of its Kanebo Cosmetics Inc. unit for $2.4 billion to Kao Corp., then Japan’s largest household goods maker. Known as IRCJ, the bailout agency also handled the December 2004 rescue of Daiei Inc., at the time the nation’s third-biggest retailer.
The IRCJ was set up to turnaround companies laden with debt after the burst of the so-called bubble economy in the 1990s. Shimokobe worked at the agency from 2003 until it was dissolved in 2007 after restructuring the finances and finding buyers for 41 companies.
Shimokobe was born in 1947 in Sapporo City on Japan’s northernmost island of Hokkaido. He graduated from the law department of Kyoto University in 1972, according to a biography on Renaiss Law Office’s website, where Shimokobe is a visiting lawyer.
Beside his time at the IRCJ, in 2006 Shimokobe was a member of an independent investigation into Livedoor Co., which was delisted for fabricating earnings statements.
Former Livedoor President Takafumi Horie -- who waged a hostile takeover battle with Fuji Television Network Inc., Japan’s biggest media group -- was imprisoned for fraud for falsely inflating profit at the Internet service company.
Shimokobe’s latest appointment clears the way for delivery of the business restructuring plan for Tepco under new management. It’s being compiled by the utility and the group Shimokobe now heads, the Nuclear Damage Liability Facilitation Fund. The fund has said it aimed to deliver the plan to the government this month.
The government has set aside 9 trillion yen ($110 billion) as part of the bailout of Tepco and to pay compensation and cleanup costs related to radiation leaks from its Fukushima nuclear plant, wrecked by last year’s March 11 earthquake and tsunami. The government has also said it wants “sufficient” voting rights in Tepco in exchange for the bailout funds.
Shares in the company have plunged 90 percent since the disaster, which also cost former president Masataka Shimizu his job. He was replaced in May last year by 36-year company man Toshio Nishizawa.
The stock today was little-changed in the first day of trading after the announcement. The shares traded 1 yen lower at 202 yen at the midday break on the Tokyo Stock Exchange.
Shimokobe will replace current Tepco chairman Tsunehisa Katsumata, 72. President Nishizawa, 60, will also be replaced by another Tepco official, Shimokobe said. He didn’t give a date for when he’ll start his new job.
“No matter who becomes the new chairman, there is no magic wand,” said Hirofumi Kawachi, a Tokyo-based analyst at Mizuho Investors Securities Co. “Tepco can’t keep running without either restarting reactors or raising electricity rates.”
Trade and Industry Minister Yukio Edano, who oversees the nuclear power industry, said Shimokobe was always one of his three top candidates for the job at Tepco, declining to name the other two.
“I had no obsession on a business leader” for the job, Edano told reporters today. “Tepco’s priorities are paying compensation, safely decommissioning reactors and providing a stable electricity supply,” he said.
To achieve the first two goals, Tepco’s corporate culture must be changed and Shimokobe’s experience in corporate revitalization and compliance is essential to do that, Edano said.
“Mr. Shimokobe knows our business and financial conditions well and he will be committed to restructuring,” Tepco said in a statement last night. “The company will discuss the new administrative organization with the new chairman.”
Shimokobe won’t have a free hand in running the utility, so he’ll need management skills along with the ability to get along with lawmakers, Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., said by phone today.
“He’ll need to consult with the government before deciding anything.”