DealBook: With Asset Sale, Tepco to Raise $2.4 Billion

Pool photo by David GuttenfelderJournalists joined company officials for a bus tour of the Fukushima Daiichi nuclear power plant on Nov. 12.

TOKYO – The Tokyo Electric Power Company, operator of the crippled nuclear power plant at Fukushima, said on Monday that it would raise 186 billion yen, or $2.4 billion, by selling its entire stake in the mobile network operator KDDI.

The planned sale is the biggest yet for the utility, which is scrambling to raise money to compensate victims of the nuclear disaster.

Tokyo Electric Power, or Tepco, has been selling assets in the wake of the March 11 earthquake and tsunami that caused a severe accident and radiation leak at its Fukushima Daiichi nuclear power plant, displacing over 100,000 people at one point. A government panel has said that compensation claims may climb as high as $58 billion.

The company will sell its 8 percent stake in KDDI back to the mobile operator at Monday’s closing price of 521,000 yen a share, Tepco said in a statement to the Tokyo Stock Exchange. The utility will book a 35 billion yen loss on the transaction, according to the statement.

The Japanese government has been desperate to keep Tepco afloat so it can pay compensation and continue to supply electricity to the greater Tokyo region, where the utility holds a virtual monopoly.

Tomohiro Ohsumi/Bloomberg NewsCustomers at a KDDI branch in Tokyo try out Apple’s iPhone 4S.

This month, the government announced a plan to inject 890 billion yen of public money into the company. Tepco should be able to raise about 700 billion yen within three years to put toward compensating victims, according to the government panel.

But the company has warned that extra fuel costs this year alone will surpass that amount, as it fires up more fossil fuel-powered plants to compensate for its crippled or otherwise out-of-service nuclear reactors. The company booked a net loss of 627 billion yen for the six months ended Sept. 30, it said on Nov. 5.

To buy back the stake held by Tepco, KDDI, Japan’s second-largest mobile network operator, plans to raise as much as 201 billion yen by selling convertible bonds, KDDI said in a separate statement.

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