Tepco amenable to $13B govt bailout: sources
Tepco will agree to be taken over by the government in a near-$13 billion bailout.
The injection of 1 trillion yen or $12.8 billion in public funds would effectively nationalize Tepco, supplier of power to almost 45 million people including Tokyo residents, reports Reuters.
This will be one of the world's biggest bailouts outside the banking sector.
Tepco has been dragging its feet over a proposal for the state-backed Nuclear Damage Liability Facilitation Fund to take at least a two-thirds stake in the company, which has been swamped by liabilities associated with the earthquake and tsunami which ruined its Fukushima nuclear power plant in March.
"If the government has a two-thirds stake, they have a right to control management, so naturally, Tepco doesn't like that," said one source familiar with the matter.
Tepco, which together with the fund is drafting a business reconstruction plan to be unveiled in March, is also seeking about 1 trillion yen in additional bank loans, sources said.
The plan calls for government control to end in six or seven years, according to a report by the Nikkei newspaper, though other reports have said it might last about a decade.
According to the plan, Tepco is expected to post a parent-only net loss of about 580 billion yen in the year ending March 31 and next fiscal year, followed by a net profit of 37.7 billion yen in fiscal 2013, largely on the sale of real estate, the Nikkei said. Tepco is also expected to generate a pretax profit of 159.1 billion yen in fiscal 2014, it added.
The projection for improved earnings is based on the assumption Tepco will increase household electricity rates by 10 percent in October and reduce fuel costs by restarting reactors at its Kashiwazaki-Kariwa nuclear plant in fiscal 2013 -- moves the utility will find difficult to execute, the daily said.
Tepco shareholders will need to approve an increase in its authorized share capital at an annual meeting in June before the nationalization plan could go ahead.