J Trust Puts $325M into Takefuji

Financial group J Trust is putting $325 million into bankrupt Japanese consumer lender Takefuji Corp., Reuters reported Wednesday. Previously, J Trust had been among the original bidders to buy Takefuji but dropped out of the race, citing a lack of transparency in the process, Reuters wrote.

(Reuters) – Bankrupt Japanese consumer lender Takefuji Corp gained a new lifeline on Wednesday when financial group J Trust said it would invest $325 million after a previous agreement with struggling A&P Financial of South Korea fell through.

The result was somewhat of a surprise as J Trust had been among the original bidders to buy Takefuji but dropped out of the race, citing a lack of transparency in the process.

J Trust’s planned 25.2 billion yen ($325 million) injection is, however, less than its original bid of 31 billion yen. J Trust rescued non-bank lender Lopro from bankruptcy last year and Lopro will take over Takefuji’s business.

J Trust beat out private equity firm TPG Capital, which had, according to sources familiar with the matter, also been in talks to become Takefuji’s new sponsor after A&P had found it difficult to raise the necessary funds.

A&P, South Korea’s largest consumer lender, also faces penalties from Korean authorities for possible breaches of rules on interest rates.

Takefuji’s court-appointed administrator said Takefuji will repay the same amount to creditors under J Trust ownership as had been planned with the first repayment to be made as early as next month.

Takefuji’s business was crippled by a 2006 legal ruling forcing Japanese consumer lenders to repay overcharged interest to customers and the company now has an estimated 1.5 trillion yen in debt.

Its first debt repayment is expected to be 50 billion yen or 3.3 percent of what it owes.