Courtesy Taro
WSJ: Kokusai Kogyo Sues Cerberus-Appointed Directors
Japanese conglomerate Kokusai Kogyo Holdings Co. Ltd. is suing Cerberus Capital Management L.P.'s Chief Operating Officer Mark Neporent and two former directors of a transport firm the companies jointly own for a violation of fiduciary duties that resulted in losses of Y52.6 billion. The lawsuit is the latest tussle between private equity firms and Japanese companies they have interests with, and adds to Cerberus' portfolio of troubles in the country - such as its investment in unprofitable Japanese bank Aozora Bank. Cerberus, which took a 55% stake in Kokusai Kogyo KK in 2004, had appointed the three defendants to the board of the bus, hotels and property company. Kokusai Kogyo Holdings owns 45% of Kokusai Kogyo KK. The three Kokusai Kogyo KK directors being sued are Cerberus's Neporent, Toshikiyo Shimizu, who resigned in June 2008, and Kazuhiko Kawai, who left in April, according to a press release by Kokusai Kogyo Holdings issued Tuesday. Kokusai Holdings said that "further despotic governance could severely decrease the corporate value of the company", adding that its employees and labor unions have also voiced their disapproval with Cerberus. In response, Cerberus said Wednesday in a written statement obtained by Dow Jones Newswires that the lawsuit was "entirely without merit" and conducted in "bad faith"...Kokusai Kogyo Holdings is seeking to recover Y52.6 billion in losses allegedly incurred by the three directors from actions such as the sale of 9.85 million shares of Teikoku Hotel in Tokyo, at the time Kokusai Kogyo's most valuable asset, and using the proceeds for the redemption of preferred shares issued to Cerberus rather than paying off the group's loan...Kokusai Holdings claims the "hasty" sale of the hotel stake resulted in the lost opportunity to sell the shares to another prospective buyer at a higher price, leading to a loss of Y12.3 billion...more...
