Report: Advantage Partners to hand over Tokyo Star

Japanese buyout firm Advantage Partners has reportedly agreed to hand over its ownership in Tokyo Star Bank to Lone Star Funds and other creditors.

Advantage Partners and Lone Star did not respond to requests for comment, while Tokyo Star Bank declined to comment.

According to a Reuters report, Lone Star will own about one-third of Tokyo Star. Other lenders that will own a stake in the bank include Japan’s Shinsei Bank and Aozora Bank, and Credit Agricole of France.

In 2008, Advantage Partners took the then Tokyo Stock Exchange-listed Tokyo Star private in a deal valued at ¥252 billion ($2.2 billion at the time). The firm borrowed ¥169.6 billion in mezzanine and senior loans from 20 creditors including Lone Star, Shinsei, Aozora and Credit Agricole.

However, as Tokyo Star suffered heavy losses, the Japanese buyout shop was unable to meet its repayment schedule. In October last year, Advantage Partners reportedly hired Nomura Holdings to seek out an additional investor for Tokyo Star in order to pay down the debt.

If the deal goes through, Lone Star will become the largest shareholder of Tokyo Star again.

In 2001, Lone Star acquired the then-called Tokyo Sowa Bank for ¥40.4 billion. The bank initially struggled under a burden of problem loans, but Lone Star turned it around with the aid of its American president and chief executive Todd Budge, partly by focusing on high margin retail lending.

In October 2005, Lone Star listed a third of the bank on the Tokyo Stock Exchange, and sold the remaining shares to Advantage Partners in 2008.