Reuters – Cerberus May Sell Stake in Aozora Bank

Cerberus Capital Management LP may sell its entire 55 percent stake in Japan’s Aozora Bank Ltd, the lender said on Thursday, sending its shares down more than 9 percent in their biggest one-day fall in a year, Reuters reported. Cerberus intends to sell part of the 821 million Aozora shares it owns in a share buyback scheme that the lender plans to launch, Aozora said in a statement.

(Reuters) – U.S. buyout firm Cerberus Capital Management LP may sell its entire 55 percent stake in Japan’s Aozora Bank Ltd, the lender said on Thursday, sending its shares down more than 9 percent in their biggest one-day fall in a year.

Cerberus intends to sell part of the 821 million Aozora shares it owns in a share buyback scheme that the lender plans to launch, Aozora said in a statement. The remaining shares may be sold in the market or through a private transaction as early as this year, it said.

At current market prices, the sale of the stake could fetch around $2.5 billion. Aozora said the exact timing and price of the stake sale has not been decided yet.

The lender also said chief executive officer Brian Prince will step down and be replaced by Shinsuke Baba, currently the chairman of the bank. The changes will be effective after a board meeting on Thursday.

Mid-sized lender Aozora, formerly called Nippon Credit Bank, was temporarily put under government control during Japan’s financial crisis in the late 1990s, when banks were sinking under the weight of loans that went sour with the bursting of an asset bubble that had emerged a decade earlier.

The bank said last month it will spend 227.6 billion yen ($2.9 billion) over a decade to pay back about 180 billion yen in public funds, ending months of speculation on how and when it will return the bailout money injected during the crisis.

Cerberus first bought a minority stake in Aozora in 2000 and then boosted its holdings in 2003 to become the lender’s biggest shareholder.

The sale of Aozora Bank would mark another exit from Japanese investments for Cerberus. The buyout firm plans to sell its holdings in Seibu Holdings, an operator of railway, resort hotels and real estate properties, and has hired investment banks to handle the sale, sources have told Reuters.

Aozora shares fell to as low as 222 yen, or 13 percent, on Thursday morning before erasing some of the losses to end down 9.02 percent at 232 yen.