Hazama’s Awful Track Record Investing in Real Estate
After investing in real estate projects in Japan and the US in the 1980s and 1990s, Hazama Corporation was forced to continually write down those investments. In 2000, Hazama Corporation asked Japanese banks to forgive ¥105 billion of loans. In 2002, Hazama Corporation announced a net loss of ¥122 billion. Then, in 2003, Hazama Corporation again asked Japanese banks, led by Mizuho, to forgive ¥150 billion of loans.
Hazama Corporation’s then-President Yamato was forced to step down, and Hazama Corporation fired over 1,000 people, reducing the workforce from 3,085 to 1,948, as widely reported at the time.
Since that time, Hazama Corporation successfully reinvented itself, merging with Ando Corporation to form Hazama Ando Corporation. The merged entity, focused on construction, has rebuilt itself into a high-return business with ample excess cash of over ¥100 billion.
We are dismayed that after so many years of hard work and shareholder patience, Hazama is about to undo all that it has accomplished by re-entering the real estate market. But what is perhaps most shocking is that Masato Fukutomi, Hazama Ando’s current President, should remember all this well. He was employed at Hazama at the time.
Those who do not remember their past are condemned to repeat their mistakes. Those who do not read history are doomed to repeat it. Those who fail to learn from the mistakes of their predecessors are destined to repeat them.
- George Satayana
With a track record of missteps this bad, why would investors want them to repeat them?
This is why Oasis is asking for the implementation of a 9.98% share buyback. Hazama’s ill-conceived re-entry into the real estate market is the greatest risk to the Company’s future. Shareholders must use their power to protect all stakeholders by sending a strong message to Hazama’s management team to immediately reconsider their plans and focus on a capital allocation strategy that will truly grow corporate value and not risk the entire enterprise.