CNN.com - Daiei seen selling restaurant chains

Daiei is trying to focus on its core department store business, and slash debts of more than $9.7 billion

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TOKYO, Japan -- Daiei plans to sell two restaurant chains this year and issue new stock to cut down its debt load of more than 1.2 trillion yen ($9.7 billion), according to reports.

The ailing retailer will offload Wenco Japan Inc. and Big Boy Japan Inc. to Zensho Co. for around 12 billion yen ($97 million), the Nihon Keizai Shimbun reported Monday. The Nikkei stated the deal would be confirmed later in the day.

The retailer is holding an extraordinary board meeting, at which it is also expected to address a plan to issue 3 billion yen ($24 million) in new shares.

The Nikkei said the new shares will be issued to a fund being set up in conjunction with the Development Bank of Japan and Daiei's creditors, UFJ Holdings, Mizuho Holdings and Sumitomo Mitsui Financial Group.

Those backers are contributing 60 billion yen to the fund. Daiei will use the 3 billion yen in proceeds to renovate stores and develop new products.

Core business

Daiei is selling the restaurant chains to slash its debts and to help it focus on its core business of department stores.

At the start of this year, it sold its security service to the U.S. fund, the Carlyle Group, for $27 million. (Full story)

Wenco runs around 80 Wendy's burger restaurants in Japan, while Big Boy has 180 restaurants, including Milky Way stores. They have combined sales of around 30 billion yen.

Zensho runs a chain of beef-on-rice fast-food restaurants. It hopes to trim its costs for buying food by expanding its product range.

Daiei shares are up 5.07 percent to 145 yen on Monday morning, at a time the Nikkei average is down 0.81 percent.