Goldman in talks on second golf-course operator


Roughly two-thirds of Japan's golf courses were built around the peak of Japan's property bubble in the early 1990s

Staff and wires

OSAKA, Japan (CNN) -- U.S. investment bank Goldman Sachs is in talks to buy up the assets of bankrupt golf-course operator Sports Shinko Ltd.

Osaka-based Sports Shinko filed for bankruptcy in February with 211 billion yen ($1.8 billion) in debts.

It is now in the hands of a trustee, Osaka-based lawyer Matsuo Tahara, who is expected to reach a decision on what to do with the company later this year.

A Goldman spokesman told CNN on Thursday that the bank has been in talks with Sports Shinko. But he said any decision on how to dispose of the bankrupt company is in the hands of the trustee.

A Sports Shinko executive said Goldman is a frontrunner to buy the failed company's 30 golf courses and two hotels.

"Goldman is a strong candidate to buy us," operations director Michihiro Chikubu told news media.

Tahara is reportedly due to meet creditors later this month to discuss the company's debt burden.

Largest overseas operator

Goldman Sachs is already the largest overseas owner of golf courses in Japan. In July, it took over Tokyo-based course operator Nitto Kogyo Co. and around 30 golf courses. (Full story)

Nitto Kogyo had collapsed into bankruptcy under some 427 billion yen ($3.7 billion) in debts.

Goldman is acting as an investor, attempting to salvage value from the golf franchise and its memberships.

It is currently consulting with Nitto Kogyo to restore it to profitability. The company will vote on a turnaround plan by early 2003.

The bank is also working with Sports Shinko, and has sent 10 Nitto Kogyo personnel to the Osaka company to advise on restructuring.

Others following suit

U.S. investment funds such as Lone Star and Ripplewood Holdings have followed Goldman's path into the golf-course business in Japan.

Golf hit its peak in Japan at the height of the bubble economy in the late 1980s. Two-thirds of the country's 2,400 courses were built around the peak of the property market.

But that crashed in the early 1990s. Most golf-course management companies have since fallen on hard times, with numerous bankruptcies.

By some estimates, the value of golf course memberships has fallen more than 90 percent since 1990.

That has encouraged investment banks such as Goldman Sachs to take over golf-course debts, repackage them where possible, and restore the companies to profit.