By Nathan Layne and Emi Emoto
TOKYO Jan 31 Japan's Seibu Holdings may hire
executives recommended by Cerberus Capital Management LP
in a sign the railway and hotel group is looking to
mend fences with its biggest shareholder ahead of a planned IPO,
people familiar with the discussions said.
Seibu applied earlier this month to relist its shares on the
Tokyo Stock Exchange, sources have told Reuters. The offering
could be worth more than $1 billion, making it one of the
biggest in Japan this year.
The two sides were locked in a bitter public feud last year,
when Cerberus, unhappy with management and its plan to go public
at a price the fund felt undervalued the company, failed in an
attempt to take control of Seibu's board.
While Seibu does not technically need Cerberus' blessing to
press on with an IPO, a lack of cooperation would likely make
the offering difficult. Hiring the executives, who would be
involved in operations but not sit on the board, would signal to
investors that Seibu was willing to work with the fund in an
effort to improve performance, the people said.
The thawing in relations is the result of negotiations
between Seibu President Takashi Goto and Cerberus founder
Stephen Feinberg over the last month, the people said. They
declined to be identified because the discussions are not
Seibu was delisted in 2004 in the wake of a disclosure
scandal and Cerberus led its bailout with a $1 billion-plus
investment. The U.S. fund currently owns 35.48 percent of Seibu
and has one representative on the company's board.
The fund has not yet agreed to sell into the IPO, the
people said. Sources have previously told Reuters that Cerberus
could sell a stake of up to 20 percent, depending on the price.
It paid 1,400 yen per share in a public tender offer last year
but now believes the share price is worth 2,000 yen or more, the
sources said, implying a market value of 684 billion yen ($6.7
A Seibu spokesman said nothing had been decided on potential
hires, and declined to comment on its listing plans. Cerberus
also declined to comment.
The relationship between the two has been viewed as a key
test case of Japan's openness to foreign capital and the
opportunities for investors to influence management.
Seibu has been eager to go public quickly to fulfil a pledge
to return to the market after its delisting and give its
shareholders an opportunity to cash out of their investment.
But Cerberus has pushed for governance and strategic changes
first in the hopes of raising the value of Seibu's businesses,
which include a large railway network in Japan, a vast property
portfolio, and Prince brand hotels and resorts.
The handful of hires now under consideration include some
executives who left last year as well as some new ones to offer
expertise in its core businesses, the people said.
The list of candidates includes Stan Brown, 54, who was
effectively ousted last year when Seibu did not put him up for
reelection as a member of its hotel division board. Brown, a
former Marriott executive, was also on the Cerberus slate of
directors rejected by Seibu Holdings shareholders in June.
Brown could not be reached for comment.
Cerberus will be making some changes to its Asian and
Louis Forster, a 15-year Cerberus veteran who was often the
public face for the fund in its dispute with Seibu, is retiring
as senior managing director and as chairman of Cerberus Asia
Pacific Advisors Ltd, though he will stay on as an adviser.
Cerberus Japan K.K. will also see its chief operating
officer Brian Saunders become co-president along with Terry