This is the first time the IRCJ has decided to help a majordebtor of UFJ and it comes as UFJ seeks to aggressively reduce itsexposure to its top 10 troubled borrowers. UFJ is one of Japan'sfour mega-banks but has been particularly exposed to non-performingproperty loans.

As part of the rehabilitation program, Daikyo's capital will becut by 99.2 % and it will receive Y176.5 billion ($1.8 billion) infinancial aid, in addition to a Y146.5-billion ($1.3-billion) debtwaiver and Y30 billion ($269 million) via a debt-to equity swapfrom UFJ Bank as well as other banks. "The financial environmentwas getting tougher for us, especially with more than 60% of ourtotal loans sourced from UFJ Bank," says Daikyo president JiheiYamazaki.

As part of the IRCJ plan, Daikyo will hold a fire sale of itsnon-core assets that include golf courses, hotels, resorts and areal estate leasing business. The company has yet to indicate howmuch it hopes to raise from the disposals but they are expected toattract foreign buyers.