Urban submits draft rehabilitation plan, finds sponsors for securitization, Hiroshima businesses

By Caroline Salls

Pittsburgh, Dec. 29 - Urban Corp. submitted a draft rehabilitation plan to the Tokyo District Court on Dec. 29 that is expected to be put to vote at a creditors meeting in March after it is reviewed and confirmed by the court, according to a company news release.

Urban said it expects to make the first distribution by the end of October 2009 for repayment of rehabilitation claims, and, within one year from the first distribution, make the second and final distribution in principle after completing the sale of all remaining assets.

The company said the first distribution is expected to be the entire amount of the claim for rehabilitation creditors for whom the sum of the principal of rehabilitation claims and the interest and delinquency charges before the order for launch of the rehabilitation proceedings was ¥2 million or less and ¥2 million plus 7.5% of any rehabilitation claims exceeding ¥2 million.

The maximum distribution ratio after the first and second distribution is expected to be or around 15% of the principal and other rehabilitation claims, and Urban said it expects to appropriate proceeds from business transfers and sale of other assets, as well as cash reserves to fund these distributions.

In addition, after receiving final approval of the rehabilitation plan, the company said it intends to obtain all of its own stocks free of charge and reduce its capital to zero under the plan, as well as to receive a third-party capital contribution.

The company's current management will all resign following the capital contribution, and, when all the distributions to rehabilitation creditors are completed, Urban will be dissolved and its entire business will be liquidated.

According to the release, an investors group organized around Kyokuto Securities Co., Ltd. subsidiary FE Invest Co., Ltd., with administrative and financial support from the Chuo Mitsui Trust and Banking Co., Ltd., has offered to support Urban's securitization business.

As a result, Urban said it entered into a business transfer agreement with FE Invest on Dec. 22. After the rehabilitation plan is approved, Urban said it will transfer the business to a joint stock company incorporated by 100% capital contribution from a fund created by FE Invest.

Meanwhile, the company also entered into a business transfer agreement with Hiroshima Venture Capital Co., Ltd. affiliate Hiroshima Amenity Co., Ltd. after Hiroshima Venture Capital offered to support rehabilitation of Urban's Hiroshima businesses.

Urban is a Hiroshima, Japan-based real estate company. It filed for civil rehabilitation in the Tokyo District Court in August.

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