September 13, 2011 / 12:20 PM / 8 years ago

Tepco creditors should share financial burden -Edano

TOKYO, Sept 13 (Reuters) - Creditors and shareholders of troubled Tokyo Electric Power Co (Tepco) should share in the burden of restructuring the utility as it grapples with huge costs from its crisis-hit Fukushima nuclear plant, Japan’s new trade minister Yukio Edano said on Tuesday.

“The reasons for supporting Tepco with taxpayer money do not include protecting creditors and shareholders,” Edano told a regular news conference.

“Here, I am stating a general principle that they should shoulder a burden, which they would have to shoulder anyway if there were no such (taxpayer) support.”

Edano, who took over the post which includes energy policy on Monday, had rattled the markets earlier this year when, as top government spokesman, he said Tepco lenders should waive part of their debts to the utility as the government sought public support for using taxpayer funds to bail it out.

The debate over shareholders’ and creditors’ responsibility was quickly put on the back burner, however, as political confusion escalated over the timing of then-Prime Minister Naoto Kan’s resignation.

The appointment of Edano as a minister with oversight authority over utilities and his remarks on Tuesday may rekindle the issue, which could have a significant impact on financial markets as Tepco has massive loans outstanding with major banks and is Japan’s largest issuer of corporate bonds.

Japan top three banks, Mitsubishi UFJ Financial Group , Mizuho Financial Group and Sumitomo Mitsui Financial Group , were among lenders that provided about 2 trillion yen ($26 billion) in emergency loans to Tepco in the immediate aftermath of the March 11 disaster, which triggered the world’s worst nuclear crisis in a quarter century.

Sumitomo Mitsui, its main creditor, alone had about 960 billion yen in loans outstanding to the utility as of March 31, including loans extended prior to the disaster.

Tepco’s creditor banks have said they are bearing their share of the burden by maintaining their outstanding loans to the troubled company, instead of demanding immediate repayment.

A bailout entity is soon due to be set up, funded by public money and contributions from other utilities, as Tepco faces massive compensation payments to businesses hurt by the nuclear crisis and residents forced to evacuate the area around the stricken plant.

Tepco must get government approval for an extraordinary operating plan, which is expected to include asset sales, cost cuts and other restructuring measures, before it can receive funds from the bailout entity. ($1 = 77.000 Japanese Yen) (Reporting by Chikako Mogi, Taiga Uranaka and Noriyuki Hirata; Editing by Edmund Klamann)

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