TOKYO Cerberus Capital Management LP will announce plans as early as Monday to raise its stake in Seibu Holdings Inc and install new directors to tighten its grip over the Japanese railway and property group, finance industry sources briefed on the plan said.
The U.S. investment fund led a bailout of Seibu in 2005 and is its biggest shareholder. But Cerberus has been at odds with Seibu management, including Seibu President Takashi Goto, over the terms of a multi-billion dollar stock market listing originally planned for 2012.
Cerberus also wants to take a different strategy from Seibu's management to maximize its return on investment, the sources said.
The proposals could set the stage for a public battle between Cerberus and the management of Seibu, which was delisted from the Tokyo Stock Exchange in 2004 after it was found to have falsified shareholder records.
Cerberus's plan involves a public tender to nudge its stake in Seibu to just above one-third from the current 32.4 percent, a level that would allow it to veto major board decisions, the sources said.
The U.S. fund's plans to raise its stake and propose new board members were first reported by Japanese media last week. In a statement on Saturday, Cerberus said it was planning to make an announcement this week but did not elaborate.
A spokesman for Seibu declined to comment.
Cerberus will propose three new directors including Hirofumi Gomi, former commissioner of Japan's financial regulator, the sources said. In addition to Gomi, Cerberus is planning to propose Masaharu Ikuta, former president of Japan Post, and Aozora Bank Ltd (8304.T) Director Yuji Shirakawa join the Seibu management team, the sources said.
Cerberus has also started sounding out Mizuho Corporate Bank and other leading shareholders about selling their shares, according to the sources, who spoke on condition of anonymity because the fund's proposals have yet to be announced.
(Additional reporting by Junko Fujita and Nathan Layne. Editing by Jane Merriman)