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UPDATE 2-Orix requests probe, says finances are fine

Published 12/04/2008, 11:11 PM
Updated 12/04/2008, 11:15 PM
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(Updates with details, background)

TOKYO, Dec 5 (Reuters) - Japanese leasing and financial services firm Orix Corp said it has asked the securities watchdog to investigate "false information" being spread by an investor and hurting its stock price.

Orix, Japan's biggest leasing company and an active investor in the property market, also said that it had secured a commitment line of 100 billion yen ($1.1 billion) from 30 financial institutions and stressed that its finances were sound.

Orix said it submitted its request to Japan's Securities and Exchange Surveillance Commission (SESC) on Friday.

Shares of Orix were up 2.5 percent at 4,590 yen as of 0351 GMT, outperforming a 0.9 percent rise in the benchmark Nikkei average.

"Orix has heard from three separate sources that an investor has been spreading false information," said Orix investor relations official Greg Melchior, declining to elaborate on the nature of the information being circulated.

The move comes about two weeks after Orix announced that it would issue 150 billion yen worth of convertible bonds, the most by a Japanese company in two years, to help it pay down short-term debt and raise funds for investments.

Shares of Orix have lost about half of their value since mid-November when media reports of the convertible bond issue surfaced, triggering worries among investors that their stakes would be diluted when the bonds are converted to shares.

Last month Orix cut its net profit forecast for the year to March by 40 percent to 105 billion yen as the tumble in global stock markets hit its investment portfolio and a weakening economy forced it to boost provisions against loans.

Investors have also been concerned about Orix's exposure to Japan's ailing property sector. Hundreds of midsize developers and builders have failed this year due to slumping demand for apartments and tighter credit conditions.

Orix has recently invested about 10 billion yen each into struggling property developer Joint Corp and condominium builder Daikyo Inc.

Kabu.com Securities market analyst Tsutomu Yamada said there has recently been speculation in the market about Orix's financial health.

"Their exposure to the real estate market is huge, and market players were wondering how Orix was planning to improve its business given today's sluggish property market," he said.

Orix said in a statement that there were no concerns over its "present liquidity and funding". (Reporting by Mariko Katsumura, Taiga Uranaka and Nathan Layne; Editing by Chris Gallagher)

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