Tokyo Considers Aid fror Tepco - Wall Street Journal

By PHRED DVORAK and KENNETH MAXWELL

TOKYO—The Japanese government is considering financial aid to the troubled Tokyo Electric Power Co., or Tepco, through an injection of public funds or debt guarantees, a government official said Friday.

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Antinuclear protesters in Tokyo confront police Thursday near the headquarters of Tokyo Electric Power.

"Unless the government takes such a step it will be difficult for Tepco'' over time to secure necessary capital, Masayuki Sudo, a spokesman for the Nuclear and Industrial Safety Agency, said in an interview Friday morning.

Tepco's viability is crucial for the safety and economic security of the residents, businesses and farmers of the Fukushima region, where the operator is struggling to control a disaster at its Daiichi nuclear power plant, Mr. Sudo added.

Japan's trade minister, Banri Kaieda, said at a news conference Friday that the government will set up a committee "soon" to consider financial support for Tepco. He called the company's financial condition "uncertain."

A Tepco spokesman responded by saying the company wasn't thinking about such matters at a time when management is more focused on shutting down the crippled nuclear power plant that has been leaking large amounts of radiation into the air and nearby seawater. "We are still working to bring the situation under control so we are not at a stage to consider these issues," the spokesman said.

But earlier in the week, Tepco's chairman hinted that the firm might seek some kind of government support. "We are in a situation where no matter how much funds we have, they're not enough," Tsunehisa Katsumata said Wednesday. "We will talk with the government and work to avert a capital shortfall," he added.

Tepco, the world's largest private utility, has taken a big financial hit since the March 11 earthquake and tsunami triggered the Fukushima crisis, and even a $25 billion loan from banks doesn't appear to be enough to cover the company's needs.

Deepening the company's woes, Moody's Investors Service Thursday night cut the company's debt rating for the second time in less than two weeks, citing "significant financial obligations" in the aftermath of Japan's March 11 earthquake. In addition to cutting the company's long-term credit rating to Baa1 from A1, Moody's said that the rating remains under review.

"The downgrade takes into consideration the enormous costs the company will incur as it recovers from this disaster," Moody's said. "Furthermore, the radiation that has already been released in and around the plant could make Tepco liable for an unknown amount of damages incurred by local residences, businesses, and farms in the area," the agency added.

The share price of Tepco, which operates the damaged Fukushima Daiichi nuclear complex, has plummeted, and close to 80% of the company's market value has been wiped out. On Thursday, its shares ended Tokyo trading at their lowest level since 1962, giving the company a market value of ¥749 billion ($9.03 billion). Shares continue to fall in morning trading Friday, at one point sinking by 10%.

Write to Phred Dvorak at phred.dvorak@wsj.com and Kenneth Maxwell at kenneth.maxwell@dowjones.com