TOKYO, April 1, (Agencies): Japan plans to take control of Tokyo Electric Power Co, the operator of the country’s stricken nuclear plant, in the face of mounting public concerns over the crisis and a huge potential compensation bill, a newspaper reported on Friday.
Shares of the company, also known as TEPCO, fell as much as 10 percent after the Mainichi newspaper said the government plans to inject public funds into the firm, although it is unlikely to take more than a 50 percent stake.
“It will be a type of injection that will allow the government to have a certain level of (management) involvement,” the daily quoted a government official as saying. “If the stake goes over 50 percent, it will be nationalised. But that’s not what we are considering.”
Peppered with questions about TEPCO, Japan’s Chief Cabinet Secretary Yukio Edano told a news conference the government had not decided on how it would support the company but buying a stake had not been ruled out.
Analysts say more palatable options for the government may include meeting some or all of TEPCO’s liabilities, letting it raise electricity prices or spinning off and nationalising the company’s nuclear business alone.
TEPCO has come under fire for its handling of the emergency at its Fukushima Daiichi nuclear complex, triggered by a March 11 earthquake and tsunami that left more than 28,000 people dead or missing.
A series of missteps and mistakes, combined with scant signs of leadership, have undermined confidence in the company. Shares in TEPCO are down 80 percent since the disaster, wiping out about $32 billion in market value. The stock ended 3.7 percent lower on Friday.
Including this week’s round of emergency loans from lenders and some $64 billion in bonds, TEPCO now has around $115 billion in debt versus equity of about $35 billion at the end of December.
The cost of insuring against debt default or restructuring by TEPCO fell on the newspaper report. The company’s five-year credit default swap spread narrowed to 335/375 basis points from a record high of 475 basis points reached earlier this week, according to Markit.
TEPCO said it was unaware of any government plan to inject public funds into it, adding now was not the time to discuss the future structure of the company.
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TOKYO: Moody’s Investors Service has cut the long-term debt rating of the utility that operates Japan’s stricken nuclear power plant for the second time in two weeks amid expectations of massive compensation claims.
The ratings agency cited “significant financial obligations” faced by Tokyo Electric Power Co from the tsunami-damaged Fukushima Dai-ichi plant that is leaking radiation. The credit rating was lowered three notches to “Baa1” from “A1” and remains under review for further downgrade.
The decision takes into account the massive costs the company known as TEPCO is likely to incur directly from the March 11 earthquake and tsunami. The utility may also have to pay damages to nearby residents, businesses and farms.
“Depending on the magnitude of the damages and the extent to which TEPCO is found liable, TEPCO’s ability to meet these large and potentially growing obligations could be severely strained,” the agency said.

TOKYO: Business confidence at major Japanese manufacturers slightly improved in March, the Bank of Japan’s closely watched “tankan” survey showed Friday.
But the central bank said the result does not fully reflect the impact of the March 11 tsunami and subsequent nuclear crisis. About 70 percent of companies replied to the tankan survey by March 11, central bank official Tetsuya Shiratori said.
In the central bank’s survey of business sentiment, the index for large manufacturers climbed to 6 in March from 5 in December.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
Improvements in production and overseas demand had helped nudge the business mood higher over the last several months. But analysts expect confidence to fall sharply as companies tally the economic costs of the disaster.
Data on Wednesday showed that industrial output climbed for the fourth straight month in February. The government, however, warned that production would plunge in the coming months. The earthquake and tsunami, which devastated the northeast coast, crippled factories and disrupted key supply chains.
Major Japanese companies, including Toyota Motor Corp. and Sony Corp., were forced to suspend production due to a shortage of components.
The Bank of Japan will release additional data Monday that breaks out the disaster’s impact on the tankan — a key barometer of the country’s economic health that helps guide monetary policy.
The Bank of Japan moved quickly after the earthquake to try to keep financial markets calm. It flooded the banking system with emergency liquidity so that banks could meet a surge in demand for funds.
Japan’s government said the cost of the earthquake and tsunami could reach $309 billion, making it the world’s most expensive natural disaster on record.
The March tankan showed that sentiment among major non-manufacturers improved to 3 from 1.