Advantage Partners and Japanese mobile phone services provider Softbank are to invest alongside the government-backed Enterprise Turnaround Initiative Corporation (ETIC) of Japan in the turnaround of bankrupt Japanese mobile services company Willcom.
Willcom filed for bankruptcy protection with the Tokyo District Court in February, causingThe Carlyle Group, which owned 60 percent of the company, to write off about $330 million in capital, a source close to the global private equity firm confirmed last month.
Advantage Partners will initially invest ¥300 million (€2.4 million; $3.3 million) in Willcom, according to a joint statement, while Softbank will assist in cost reduction efforts at the business. ETIC and other banks will provide Willcom with a credit line worth ¥12 billion and the company will continue operations.
Subsequently, the eXtended Global Platform (XGP) business of Willcom, a next generation high-speed data transfer service, will be spun off and transferred to a new company to be set up by Advantage Partners, Softbank and other potential investors. Advantage Partners will invest ¥5 billion in the new company and Softbank another ¥3 billion, according to a joint statement.
In 2004, Carlyle partnered with Japanese electronics company Kyocera Corp to purchase Willcom, then named DDI Pocket, for ¥220 billion (at the time equivalent to $2.03 billion) from telephone company KDDI Corp. Following the transaction, Carlyle held 60 percent of the equity, while Kyocera and KDDI held 30 percent and 10 percent respectively. According to various media reports, Willcom had debts of around $2.3 billion at the time of its bankruptcy filing.
This is the second investment by ETIC, which was established by the Japanese government in October 2009. In January, it agreed to put together a revitalisation programme for struggling national carrier Japan Airlines (JAL), which has debts of about $15 billion and a large pension deficit. ETIC was approached by JAL in October 2009. TPG Capital and US airline operator American Airlines have offered to invest $1.1 billion to restructure the Japanese airline.
Established in 1992, Advantage Partners manages assets of about ¥380 billion as of June 2009. It is currently deploying capital from its fourth buyout fund which closed on ¥215 billion.