President of Tokyo Electric Power steps down

The president of Tokyo Electric Power Company resigned after the company posted the biggest loss by a non-financial Japanese company as a result of the worst nuclear disaster since Chernobyl.

Masataka Shimizu, the president of Tokyo Electric Power Company, left, bows after resigning yesterday. Toshio Nishizawa, right, will replace him.

TOKYO // The president of Tokyo Electric Power Company resigned yesterday after the company posted the biggest loss by a non-financial Japanese company as a result of the world's worst nuclear disaster since Chernobyl.

The utility known as Tepco had a full-year loss of ¥1.25 trillion (Dh56 billion), according to a statement. Masataka Shimizu resigned as the president of Tepco after the results were announced.

"I wanted to take managerial responsibility and bring a symbolic close," he told reporters, bowing several times during the news conference. "We are doing our utmost to settle the crisis."

He will be replaced by the managing director, Toshio Nishizawa.

Tepco is likely to report more losses as it pays compensation to those affected by its loss of generating capacity and decommissions three damaged nuclear reactors. Costs for the disaster may reach as much as ¥11tn, according to Bank of America Merrill Lynch.

The government, which last week said it would set up a fund to support Tepco, might need to take control, said an asset manager.

"Without state support, it will be difficult for Tepco to remain as a publicly-traded company," said Junichi Misawa, the head of equity investment at the Tokyo company STB Asset Management, which oversees about $17bn. "This loss can't be a one-off event for this year as [Tepco] will have to continue paying compensation."

Tepco's loss eclipsed the ¥812bn deficit reported by Nippon Telegraph & Telephone in the year ended March 2002. Mizuho Financial Group's ¥2.38tn loss the following year is the largest in Japan.

The utility will book a ¥1.1tn charge for the worst nuclear crisis since Chernobyl in 1986 and plans to raise ¥600bn from selling assets. It will complete plans to reorganise by the end of the year.

For the year ended March 31 last year, Tepco had total capital of ¥2.5tn, indicating that the current loss will wipe out half of its capital.

"Given the government has said it wants the company to stay listed, Tepco will probably beef up its equity capital," said Kenichi Hirano, the general manager and a strategist at Tachibana Securities in Tokyo. "Common practice would be for the company to issue preferred shares to the government."

The Fukushima Daiichi nuclear plant north of Tokyo has been spewing radiation since the March 11 earthquake and tsunami damaged power and cooling systems, causing at least one of six reactors to melt down.

Shares in the company rose 2.5 per cent to ¥367 yesterday. The stock has fallen 83 per cent since the day before the quake, wiping ¥2.9tn off the company's market value.

* with agencies