KELLOGG BROWN & ROOT, one of the biggest international engineering and construction companies, will help CHIYODA CORP. restructure its operations. Japan's number-two plant engineering firm also ranks among the world's 10 largest engineering and construction businesses, but it is bleeding red ink because of unprofitable overseas projects, particularly in Asia. KBR, a unit of HALLIBURTON CO., will indirectly acquire a 6.45 percent equity interest in Chiyoda through a company to be formed with MITSUBISHI CORP. The trader, which was instrumental in gaining KBR's agreement to help Chiyoda, also will increase its stake by 6.45 percent. The American company's assistance will not be limited to bolstering Chiyoda's capital. KBR reportedly will take an active role in management as well as provide project support. Once the deal with Chiyoda is finalized, the Dallas company could have ties to all three of Japan's top plant engineering firms since it already cooperates with TOYO ENGINEERING CORP. on ammonia plants and is talking to JGC CORP. about working together on liquefied natural gas projects. Mitsubishi and KBR have a long-standing relationship that includes the trader's ownership of 40 percent of KBR DEVELOPMENT CORP.
Extending its already considerable operations in Japan, KENNEDY-WILSON, INC., an international real estate investment, marketing and property management firm, has agreed to form a joint venture with the office building management unit of NIPPON CREDIT BANK, LTD. Through this arrangement, the Los Angeles company will assist in the management of roughly 20 buildings currently managed by NIPPON JISHO CO., LTD. It also will continue to manage properties in Japan that it owns as well as third- party properties. Kennedy-Wilson and its new partner view the introduction of American-style property management techniques as essential as foreign companies invest more aggressively in Japan and the securitization of real estate assets increases.
A year later than anticipated, work has started on Japan's first Sleep Inn, the limited-service, affordably priced hotel brand franchised by CHOICE HOTELS INTERNATIONAL, INC. The $5 million 10-story, 110-room hotel in Fukuyama, Hiroshima prefecture is being developed in a tie-up with VESSEL CO., LTD., also located in Fukuyama, under an arrangement concluded in September 1997.
For reasons that were not given, PACIFIC HOUSING MATERIALS & DESIGN INC. of Bellevue, Washington pulled out of a company formed in 1996 with a Japanese partner to set up one-stop supply centers for builders of American-style homes. The idea behind the Saitama prefecture-based joint venture was intriguing: opening miniwarehouses that not only would stock building materials for 2 x 4 housing but also would have architects on staff who could produce working drawings in Japanese that met domestic regulations. The recession and lagging housing starts might have influenced PHMD's decision to end its involvement.
An exchange rate of ¥120=$1.00 was used in this report.aaaaaa