March 29, 2011 / 12:28 AM / 8 years ago

UPDATE 2-Tokyo Electric nationalisation eyed by some in Japan govt-media

* Plan floated would see govt take majority stake in Tokyo Elec - Yomiuri

* Tokyo Elec shares indictated down 19 pct on nationalisation report (Adds share reaction, trader comments)

TOKYO, March 29 (Reuters) - A plan to temporarily nationalise Tokyo Electric Power , the operator of a stricken nuclear plant, has been floated by some members of the Japanese government, the Yomiuri newspaper said on Tuesday.

The plan includes the government taking a majority stake in Asia’s largest utility as well as helping it pay for damages stemming from the nuclear accident, the newspaper said, citing unidentified government sources.

Shares in Tokyo Electric have tumbled 70 percent since the March 11 earthquake and tsunami struck its Fukushima Daiichi nuclear complex, causing it to leak radiation.

The crisis appeared to escalate in the past few days with plutonium found in soil on Tuesday, rattling already shaky financial markets. [ID:nL3E7ES2ND]

Chief Cabinet Secretary Yukio Edano said it was not true the government was considering nationalising the utility.

Tokyo Electric spokesman Hajime Motojuku said he was unaware of any plan for nationalisation: “Our first and biggest priority at this moment is to prevent the nuclear power plant accident from worsening further,” he said.

Tokyo Electric shares were untraded due to a glut of sell orders at 566 yen, down 19 percent from Monday’s close. The company has lost about $30 billion in market value since the March 11 disaster.

Hajime Nakajima, a trader at Cosmo Securities, said that investors were seen “spooked” by the nationalisation report.

“Although details cannot be seen such as how exactly the government is going to nationalize the company, as long as there are concerns that Tepco may be nationalized, investors don’t want to hold the stock. Passive funds are selling too.”

In a step to shore up its finances, Tokyo Electric Power has started talks with Japan’s largest banks for emergency loans of up to $25 billion, sources told Reuters last week.

The utility, which provides power to about one-third of the Japanese population, had 432 billion yen in cash and equivalents at the end of December and 7.5 trillion yen in outstanding debt, according to its financial statements.

Of its rougly $64 billion in outstanding bonds, the company is due to repay $4.8 billion this year, and another $5.6 billion in 2012, underscoring the importance of refinancing to meet its funding needs.   (Reporting by Mariko Katsumura; additional reporting by Ayai Tomisawa; Editing by Edwina Gibbs and Nathan Layne)

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