Burden of Kanebo bailout

産業再生機構のカネボウ支援

The bailout plan calls for the creation of a new company to succeed the profitable cosmetics division. This is intended to make things easier for the rump Kanebo — an assemblage of underperforming operations, including textile and food divisions. A broader revival program involving all Kanebo operations is expected to be completed by mid-May.

The immediate task for the IRC is to assess Kanebo's assets, excluding those of the cosmetics division, by rational and rigorous standards. The need for reform demands that Kanebo management and creditor banks shake off any sense of complacency that may have contributed to the failure of the nation's second-largest cosmetics company.

Kanebo is a victim of its pride. As part of a vaunted strategy dubbed "Pentagon management," the company built a far-flung conglomerate dealing in cosmetics, textiles, food, home products and drugs. But only cosmetics have generated profits on a sustainable basis. An ingrained attitude of mutual dependence has driven the company into a tight corner.

Kanebo's more recent behavior has revealed a lack of insight. Initially, it tried to sell its cosmetics business to Kao Corp., a leading maker of sanitary and cleansing products. That seemed to make good business sense, but the plan backfired when the union balked. So the company asked for help from the IRC but offered no quid pro quo: It would neither accept a management changeover nor request debt relief from creditor banks.

That was asking too much. Predictably, Kanebo executives came under heavy fire and resigned en bloc. They could have taken a more respectable exit strategy. Kanebo is yet another case of corporate governance gone awry because of management mistakes.

The revival plan put together by the IRC comes in two phases. First, the cosmetics division will be transferred to a new company. Its price tag, which the agency puts at ¥380 billion, falls short of Kanebo's expectations. That ought to be expected, though, for it is natural for public auditors to evaluate private assets under more stringent rules.

The new company, to be capitalized at ¥100 billion, will be owned 86 percent by the IRC and 14 percent by Kanebo. In all, the agency will provide ¥366 billion in public funds — the largest amount committed for a company. The sum breaks down to ¥280 billion in loans and ¥86 billion in capital.

Why spend so much money on a profitable cosmetics business? The simple answer is that the crown jewel of Kanebo should be separated from weak operations to facilitate the revival process. This is where the plan's second phase comes in: asset assessment of all the remaining operations. The idea is to shake up laggard branches while keeping the fast-track brand image of Kanebo cosmetics intact.

To succeed, the entire plan must be supported by creditor banks. Debt forgiveness seems unavoidable. Kanebo's new management must accept sacrifices. Likewise, the labor union cannot have its cake and eat it, too. Shareholders must feel part of the pain. In short, the burden of the bailout must be shared.

That said, the IRC needs to review its role. It started out in April 2003 as a provisional body to bail out insolvent but potentially strong companies. Its main purpose is to help rehabilitate corporate patients by taking over a chunk of the debts they owe banks and other financial institutions. These debt-buying operations are due to end in March 2005.

So far, the IRC has come to the rescue of more than 10 companies, of which Kanebo is the largest. By and large, the IRC's performance has been lackluster. The IRC owes the public a full accounting of why it has decided to help Kanebo, a company of little public-interest nature, and how it will do so.

The Japan Times Weekly
March. 27, 2004
(C) All rights reserved

      支援計画のもと、同社は高収益の化粧品事業を分離するため新会社を設立するが、これで繊維、薬品など不採算部門の再建が容易になる。全カネボウ再建計画は5月中旬までに策定する予定だ。

      カネボウは化粧品、繊維、食品、家庭用品、薬品事業などを扱う巨大複合企業になったが、長期的に利益を出したのは化粧品部門だけだった。

      当初、カネボウは化粧品部門を花王に売却する予定だったが、労働組合の反対で計画は失敗した。そこで産業再生機構に支援を求めたが、カネボウが決定した再建計画には経営陣の交代や銀行の債権放棄は含まれていなかった。批判を浴びた経営陣は退陣に追い込まれた。

      機構の再建案では、化粧品部門を新会社に移譲する。機構は化粧品事業の価値を3800億円と見積もっているが、この金額はカネボウの予想よりずっと低い。

      新会社の資本金は1000億円で、出資比率は86%が機構、14%がカネボウとなる。機構は3660億円の公的資金（2800億円は融資、860億円は出資）を投入する。巨額の公的資金投入で、化粧品部門と他の低収益部門を分離するが、そこで他部門の資産査定が必要になる。

      再生計画の成功のためには関係銀行の支援が必要だ。債権放棄は避けられない。新経営陣、組合、株主も痛みを分かち合わねばならない。

      産業再生機構は03年4月に、経営不振だが再生の見込みのある企業を救済する暫定的組織として設立された。主要業務は、企業再生のために金融機関に対する負債を買い取ることだったが、その業務を05年3月に終える。

      機構はこれまでに10社以上を支援してきたが、そのなかでカネボウが最大である。機構は、あまり公共的意味がないように見えるカネボウの支援について国民に十分説明する必要がある。