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Japan to inject funds into ailing companies

TOKYO, Apr 22 – Japan passed a law on Wednesday to enable injections of public funds into struggling companies, with electronics makers reportedly set to receive hundreds of millions of dollars in government aid.

Pioneer, Hitachi and Elpida Memory are among the firms considering applying for funds in exchange for stock.

"We are considering seeking public funds as one possible measure," Pioneer spokesman Akio Omachi said, adding that nothing definite had been decided yet.

Parliament enacted the revised industrial revitalisation law after it passed through the upper house, a parliamentary official said.

The Nikkei economic daily said Wednesday that Pioneer was hoping to get 30 billion yen (303 million dollars) and Elpida was aiming for 50 billion yen (508 million dollars) in exchange for issuing stock to a state-backed lender.

The newspaper said the government was concerned about Pioneer\’s weakness and the impact that its failure would have on the overall economy owing to its 10,000-strong workforce in Japan alone.

Companies seeking government money under the revised law are required to meet certain conditions, including having at least 5,000 and sufficient recovery plans.

Japanese firms have been hit hard by a slump in exports and weak domestic demand amid the country\’s worst recession in decades.

Pioneer has forecast a net loss of 130 billion yen for the last financial year which ended in March, its biggest ever. It is cutting 10,000 jobs worldwide and quit the television business to focus on car electronics.

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Elpida, the world\’s third largest maker of DRAM chips used in mobile phones and home electronics, has also said it may tap the government for funds to enhance its capital base, though it has not said how much.

The Nikkei reported that in addition to obtaining funds from the Development Bank of Japan in exchange for shares, Elpida also hopes to secure an emergency loan of 20 billion yen from the state-backed lender.

An Elpida spokesman said the company would make a final decision on whether it would apply for government money after looking at the details of the scheme.

Hitachi, which is bracing for a full-year loss of about seven billion dollars, also said this week it was considering applying for the revitalisation programme.

The Yomiuri Shimbun newspaper said that NEC and Toshiba were also considering tapping the government for money.

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