Cerberus Prepared to Wait Up to 3 Years to Relist Seibu

Cerberus Capital Management LP, owner of 32.4 percent of Seibu Holdings Inc., is willing to wait as long as three years for the relisting of the Japanese rail and hotel operator.

The private-equity firm wants to increase its stake and appoint three new directors before selling shares to the public in two or three years, said Masakazu Iwakura, a lawyer for Nishimura & Asahi who is advising the New York-based company. Seibu, preparing for a listing as soon as possible, opposes the Cerberus plan.

Cerberus, which oversees more than $20 billion, is offering to raise its stake to as much as 36.4 percent after leading a bailout of the company with Nikko Principal Investments Japan Ltd. in 2005. Seibu is now “financially prepared” for the relisting, according to President Takashi Goto.

“Cerberus wants to improve corporate value through the addition of the new board members it is proposing,” Iwakura said. “It may take two to three years.”

The Tokorozawa city, Japan-based rail operator had been delisted from the Tokyo stock exchange in 2004 after misstating stakes held by shareholders, breaking exchange rules.

Five Banks

The rail operator is predicting net income will increase to 12.4 billion yen ($132 million) in the year ending this month, compared with 8.4 billion yen last fiscal year. It last year hired five banks for a proposed initial public offering.

Cerberus is proposing Hirofumi Gomi, a former commissioner of Japan’s Financial Services Agency; Masaharu Ikuta, former president of Japan Post, and Yuji Shirakawa, former chairman of Citigroup Global Markets Japan, to join Seibu’s board.

“Cerberus’s tender offer and suggestion of new directors is uncooperative, given our aim to list shares as soon as possible,” Goto told reporters in Tokyo today. “Seibu wants to continue discussions with Cerberus towards listing our shares.”

Cerberus plans to raise voting rights in Seibu to as much as 36.4 percent through an offer to buy outstanding shares at 1,400 yen each, it said earlier this month.

Seibu was the seventh-largest railway operator in the Tokyo area by ticket sales, according to figures from East Japan Railway Co., the nation’s largest rail operator. It had 93.7 billion yen of ticket sales in the fiscal year ended March 2011, according to JR East. The company’s operations also include hotels, golf resorts and buses.

Seibu was previously run by Yoshiaki Tsutsumi. He amassed a $16 billion personal fortune while at its helm, making him the world’s richest man in 1990, according to Forbes magazine.

“We’ve been friendly in our approach to Seibu, that’s Cerberus’s basic policy,” said Iwakura. “Whatever they said we’ve been cooperative.”

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