UPDATE 1-JAL close to securing $1.4 bln of capital-sources

Thu Feb 14, 2008 10:01pm EST
 
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(Recasts, adds company comments and background)

TOKYO, Feb 15 (Reuters) - Japan Airlines Corp (9205.T: Quote, Profile, Research, Stock Buzz) is close to raising up to 150 billion yen ($1.4 billion) of capital by selling preffered shares to lenders and business partners in a bid to shore up its financial health, sources said on Friday.

JAL, which has struggled with steep oil costs and a string of safety mishaps, said last week it swung back to profit for the nine months ending in December by trimming routes, adding flights to growing markets like China and raising prices.

The carrier plans to use the money to replace its fleet with more fuel-efficient planes to better cope with rising energy prices, the sources said.

The capital injection is expected to be part of the firm's mid-term business plan, scheduled to be unveiled on Feb. 29.

The Development Bank of Japan, Mizuho Corporate Bank (8411.T: Quote, Profile, Research, Stock Buzz), Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) and Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) have been requested by the airline for an injection of 5-20 billion yen each, the sources said.

Other business parters asked for the support are trading houses and oil wholesalers such as Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) and Mitsui & Co (8031.T: Quote, Profile, Research, Stock Buzz).

These companies have mostly agreed to the terms of the deal, and the amount of capital raised is expected to finalised by the end of the next week, the sources said.

JAL said in a statement that nothing has been decided on the capital injection.

Shares of JAL rose 0.4 percent to 259 yen, outperforming a 1.5 percent decline in the Nikkei average .N225. (Reporting by Noriyuki Hirata and Nathan Layne: Editing by Eric Burroughs)

 

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