TCI to take Japan to court if J-Power bid rebuffed

TOKYO, Feb 21 (Reuters) - British hedge fund TCI said on Thursday that it would take the Japanese government to court if it rejected its bid to raise its stake in Electric Power Development Co (9513.T: Quote, Profile, Research, Stock Buzz) on national security grounds.

The Children's Investment Fund (TCI) applied to the government last month to increase its holding in Electric Power Development, an electricity wholesaler commonly known as J-Power, to up to 20 percent from 9.9 percent.

Foreign investors must seek government approval to take stakes above 10 percent in sectors such as utilities, nuclear power equipment and aircraft that are seen as vital to the country's security.

The Ministry of Economy, Trade and Industry normally takes 30 days to review such requests. But last week it extended the screening process for TCI's application to mid-May to further examine the fund's intentions.

TCI director John Ho told Reuters in an interview that he expected METI to eventually give it the green light to buy more J-Power shares as long as the decision was based on whether TCI posed a threat to security or public order.

But TCI would fight a rejection in court, Ho said.

"The world is watching this. How can we be a national threat? It doesn't make sense," he said. "We will challenge it in all available domestic and international jurisdictions. We are not going to go away."

The decision by METI is being closely watched as a test of how open Japan is to foreign investment.

Trade minister Akira Amari has said that J-Power, which plans to complete its first nuclear power plant in 2012, is a company that is in a broad sense a part of Japan's national security network.

TCI has called on J-Power to increase its dividend, boost returns on equity and sell down cross-shareholdings, among other steps, but it has so far been rebuffed by management and shareholders. (Reporting by Reiji Murai, Nathan Layne, Kentaro Hamada and Emi Emoto; Editing by Hugh Lawson)