"The scheme is likely to be what the market has expected, with bond holders to be protected and no cap on Tokyo Electric's liabilities," said Kazuya Nakamura, deputy general manager at Norinchukin Zenkyoren Asset Management.
"Now, the market's attention will shift to how much Tokyo Electric's actual liabilities will be," he said.
Tokyo Electric said on Wednesday that it had accepted conditions set by the government in return for state assistance, including additional restructuring and unlimited liability in paying compensation to crisis victims.
Kyodo news agency said the government would ask Tokyo Electric to secure 1 trillion yen in funds through asset sales and streamlining in the first year of the scheme.
Tokyo Electric likely made a net loss of more than 1 trillion yen in the year that ended on March 31, the biggest ever for a non-financial Japanese firm, after booking costs to scrap four damaged nuclear reactors and writing off tax assets, the Nikkei newspaper reported on Wednesday.
Tokyo Electric will sell assets worth about 500 billion yen to help cover costs from the crisis, the paper said.
The utility is still struggling to get reactors at Fukushima Daiichi under control two months after the disaster.
Trade Minister Banri Kaieda called this week for cooperation from the utility's creditor banks, without giving details, but an executive at one top bank said it would not accept a reduction in interest payments or a partial debt waiver.
"If Tokyo Electric makes such a request, IT WOULD TRIGGER A CREDIT EVENT and the company would be seen as going into default. Neither the company nor the government would want that to happen," the executive said late on Tuesday, speaking on condition of anonymity due to the sensitivity of the matter.
"What Tokyo Electric needs most from the banks now is to keep its loan balance maintained," the executive added.
This is bail out situation, yes government wants banks loan forgiveness to "tepco" banks have no problems with that as long freshly supplied money supply "print money" pump into system by the government final results government sheltering every body.
What would be inflation rate and value of Japanese money? Government has to come up with solution to those key problems.
Otherwise every thing would move rotational and orderly basis depending on degree of importance and priority level.
" Chief Cabinet Secretary Yukio Edano reportedly told (said) a press conference that the utility (9501) (TKECY) shouldn’t receive any injection of public funds before (UNTIL) its lenders made more efforts, such as WAIVING SOME OF ITS DEBTS from before the March 11 disaster."
In other words, "Mr. Bankers, tsunami victims, and TEPCO shareholders, I'm kinda thinkin (trial balloon) that the government shouldn't give you characters a red cent until you eat some of TEPCO's debt payments yourself". He's trying to hold Tepco and the banks hostage.
"Under the support plan, a STATE-BACKED institution WILL FUND the utility BY BORRWING PUBLIC FUNDS that it can in turn loan to Tepco. "
This is the key sentence. They are loaning the money to TEPCO, but TEPCO is not the borrower - the state institution is the borrower, and they are LOANING the money to TEPCO. But it is my understanding that the $2.4BL over 13 years is what TEPCO is going to pay the fund in return.
You're right, it's confusing, but I just can't believe that the company would agree to something so injurious financially - no cap on liability limits and government support only in terms of LOANS that must be paid in full 100% to the government. I don't get it. That's no deal at all. They are putting the entire responsibility onto the utility industry.
" Other utilities operating nuclear-power plants will also pay into a fund, and the government will issue special-purpose bonds that Tepco can use to pay damages." What are the terms of those special purpose bonds?