Midsize Japanese contractor Nissan Construction Co announced yesterday it has given up efforts to rehabilitate itself and applied for court protection from creditors.
The company, listed on the first section of the Tokyo Stock Exchange, has liabilities amounting to about Japanese yen 114.6 billion (US$865 million), Nissan Construction president, Takeshi Fujita, said.
"We explored the possibility of revival through a corporate tie-up but our financial position was too weak," said Fujita, who resigned Sunday along with the company's eight other directors.
Nissan Construction, 48 percent owned by failed supermarket operator Mycal, has close business relations with heavy machinery and engineering company Hitachi Zosen Corp as well as Nissan Motor Co.
Mycal, Japan's fourth largest supermarket chain, filed for court protection from creditors in September after its main bank cut off funding.
Mycal's failure hit Nissan Construction hard because the supermarket operator had owed the builder about Japanese yen 12 billion (US$90 million) in payments, Fujita told reporters yesterday.
The Nissan Construction failure would be the second this month by a construction company. In early March, builder Sato Kogyo, with debts estimated at Japanese yen 500 billion (US$3.76 billion), filed for court protection. Public fears have been growing over high-profile bankruptcies. Last year construction company Aoki Corp went under. In January, home builder Shokusan Jutaku Sogo Co filed for protection from creditors.
Many builders have suffered a decline in orders since Prime Minister Junichiro Koizumi swept to power vowing to end to pork barrel spending on highways and other construction projects.
Spending under previous leaders had made Japan's debt the highest in the industrialized world at about US$5.4 trillion, equivalent to 130 percent of gross domestic product.
Nissan Construction, founded in 1946, forecast a net loss of Japanese yen 24.6 billion (US$186 million) for the year ending March 31, sharply lower than its net profit of 434 million yen in the previous year.
The company had announced a restructuring plan last May followed by another last November, but falling demand combined with a freeze on many public works projects had forced it to file for bankruptcy, it said.
The Tokyo Stock Exchange said yesterday it will delist Nissan Construction's stock on July 1.
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