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Tokyo Star Shareholders Miss Loan Payment

Japanese private equity firm Advantage Partners said that four special purpose firms it established to buy Tokyo Star Bank have missed loan payments and will probably relinquish control of the bank, Reuters reported. Advantage established the special purpose firms to buy Tokyo Star bank in a $2.2 billion deal three years ago. U.S. investment fund Lone Star and other banks that extended loans for the 2008 acquisition of Tokyo Star are planning to set up a special purpose company that will take over the bank’s shares, Reuters wrote.

(Reuters) – Japanese private equity firm Advantage Partners said that four special purpose firms it established to buy Tokyo Star Bank for about $2.2 billion three years ago missed loan payments and would likely relinguish control of the mid-sized bank.

U.S. investment fund Lone Star and other banks that extended loans for the 2008 acquisition of Tokyo Star are planning to set up a special purpose company that will take over the bank’s shares, which had been put up as collateral, Advantage Partners said.

The deal will bring Tokyo Star back under the umbrella of Lone Star, the former owner of the bank which had taken it public in 2005 and sold its remaining stake in the 2008 deal near the height of a leveraged buyout boom.

Tokyo Star, which provides loans to individuals and small businesses in Tokyo, has struggled to carve out a profitable niche for itself in Japan’s overcrowded banking sector. It posted a net loss of 2.8 billion yen ($34.3 million) in the year ended in March 2010.

Tokyo Star failed to make dividend payments in January, which triggered the missed loan repayments, Advantage Partners said.

The Japanese private equity firm said that neither it, funds that invested in special-purpose companies to buy Tokyo Star, nor Tokyo Star Bank were obliged to make the loan repayments. (Reporting by Junko Fujita; Editing by Nathan Layne)