NEC announces debt waiver of a consolidated subsidiary
Tokyo, Japan - February 29, 2016 - NEC Corporation (NEC; TSE: 6701) today announced that it will waive debts owed by its consolidated subsidiary, NEC Mobile Communications, Ltd. (NEC Mobile Communications).
- Background of the debt waiver
NEC Mobile Communications will transfer all of its business to NEC on March 1, 2016. Since it is expected that NEC Mobile Communications will be ready for liquidation after the completion of the business transfer, NEC decided to dissolve NEC Mobile Communications, and waive debts owed by NEC Mobile Communications. The dissolution will be effective as of March 24, 2016.
- Summary of the debts to be waived
- Type of debts: loans
- Total value of debts to be waived: about 101.2 billion yen
- Implementation date: March, 2016
- Future outlook
An allowance has been recorded for the amount of bad debt losses related to this debt waiver in NEC's non-consolidated financial statements for the third quarter of the fiscal year ending March 2016. Since the amount of the bad debt losses can be included as a deductible expense for tax purposes, a decrease of tax expense of about 24.0 billion yen is expected for the fiscal year ending March 2016.
As a result, an increase in profit attributable to owners of parent of about 24.0 billion yen for NEC's consolidated results and an increase in profit of 24.0 billion yen for its non-consolidated results are expected. The influence of the above has been factored into the revised consolidated financial forecasts for the fiscal year ending March 31, 2016, as disclosed today in the "NEC announces financial forecast revisions" press release.
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