Case | HBS Case Collection | November 2008 (Revised January 2009)

The Restructuring of Daiei

by Richard S. Ruback

Abstract

In 2004, the Industrial Revitalization Corporation of Japan (IRCJ) was given the task of restructuring Daiei, one of the largest Japanese retailers and the country's most prominent zombie companies. The IRCJ was a government-sponsored organization that was funded with 50 billion yen in equity capital and 10 trillion yen of government - guaranteed funds. Daiei presented the IRCJ with a unique opportunity to demonstrate the effectiveness of its restructuring strategy which would require a significant write-down of Daiei's bank debts, substantial store closures and workforce reductions, and sufficient new private equity capital to help reposition and revitalize Daiei's retail operations. Overcoming these hurdles in a large and visible company like Daiei would be an important accomplishment for the IRCJ. But, failure, too, would have far reaching consequences.

Keywords: Restructuring; Capital Structure; Private Equity; Performance Effectiveness; Retail Industry; Japan;

Citation:

Ruback, Richard S. "The Restructuring of Daiei." Harvard Business School Case 209-060, November 2008. (Revised January 2009.)