With NIKKO SECURITIES CO., LTD. set to transfer most of its international operations to SALOMON SMITH BARNEY INC. as part of a broad affiliation with TRAVELERS GROUP INC. (see Japan-U.S. Business Report No. 346, July 1998, p. 15), Japan's number-three brokerage house ended its long- standing relationship with the rival investment banking firm of BLACKSTONE GROUP. Nikko Securities tied up with Blackstone in October 1987 to gain expertise in mergers and acquisitions as well as to mediate M&A deals between Japanese and foreign firms. The arrangement included a $100 million limited partnership interest in the New York City company. That money has been redeemed.
In a restructuring move designed to reduce its debt, Japan's top credit- card issuer, NIPPON SHINPAN CO., LTD., will end international operations. Its New York City subsidiary has stopped trying to develop new business as a prelude to being liquidated sometime over the next three years. Another U.S. subsidiary, Dana Point, California-based MONARCH BAY RESORT INC., has sold its real estate holdings, including golf courses, to CAPITAL PACIFIC HOLDINGS, INC. of Newport Beach, California for $120 million. It, too, is expected to be shut down.
The credit crunch in Japan is leading some companies there to try new ways of raising funds. A prime example is SHOWA LEASING CO., LTD. It is issuing asset-backed securities in the United States, hoping to raise the yen equivalent of $355 million at rates lower than what it would have to pay to borrow from a bank at home. Aimed at institutional investors, the five-year, dollar-denominated bonds are secured by roughly 15,000 of the company's domestic lease contracts.
An exchange rate of ¥141=$1.00 was used in this report.