* U.S buyout firm Carlyle owns 60 percent of Willcom
* Mobile firm seeking aid from state fund, Softbank, Advantage
* Willcom to cut equity to zero
(Adds detail, comment from company)
By Junko Fujita
TOKYO, Feb 18 Japanese mobile communications
provider Willcom Inc said on Thursday it has filed for bankruptcy
with 206 billion yen ($2.3 billion) in debt, a move that will
wipe out an investment made by U.S. buyout firm Carlyle.
Willcom, Japan's fourth-largest provider of mobile phone and
wireless data services, has been weighed down by heavy debts and
has been struggling to expand its subscriber base in the
country's saturated and fiercely competitive wireless market.
The company, 60 percent owned by Carlyle, also said it had
asked the state-backed Enterprise Turnaround Initiative Corp of
Japan, as well as the nation's No.3 mobile phone operator
Softbank Corp (9984.T) and Japanese private equity firm Advantage
Partners to provide it with financial aid.
Willcom in September applied for a procedure known as ADR, or
alternative dispute resolution, under which a financially
struggling company can negotiate with lenders on loan repayments
"After it became known that we had applied for ADR, it was
difficult for us to attract new users," Willcom President Yukio
Kubota said at a news conference on Thursday.
"And that made it hard for us to keep to our plan to turn the
business around to make debt repayments."
Willcom's current board members will resign and Kubota will
become one of the firm's administrators, he said.
Kubota also said the company will cut its equity to zero
before potential investors inject money.
Willcom was founded as a mobile phone unit of KDDI (9433.T),
using using so-called called PHS, or personal handy-phone system,
PHS phones lured young users with cheaper fees and smaller
models compared to cellular phones, but their attraction faded as
cell phone technology improved.
In 2004, Carlyle and electronics maker Kyocera Corp bought a
90 percent stake in the company from KDDI for a combined total of
220 billion yen. KDDI still holds a 10 percent stake.
Willcom, however, has continued to struggle as it competes
against NTT DoCoMo Inc (9437.T), KDDI and Softbank.
Competition increased after Emobile Ltd, the mobile phone
unit of Internet access provider eAccess Ltd 9427.T, entered
the market in March 2007.
Willcom's subscriptions fell by 58,000 in January from
December to 4.24 million, while EMobile increased its number of
users by 63,300 to 2.18 million in the same period, according to
an industry group.
The industry giant NTT DoComo had 55.5 million users in
The ETIC is also bailing out Japan Airlines Corp 9205.T,
which failed in January. [ID:nSGE61G0LK]
Willcom director and senior adviser Kazuo Inamori is JAL's
new chief executive. Inamori is also the founder and honorary
chairman of electronics firm Kyocera.
(Reporting by Junko Fujita; Editing by Joseph Radford)