U.S Businesses Taking Advantage of Troubled Japanese Companies

Today, the Japanese not only acknowledge the problem, they are welcoming workout honchos with open arms. Investors, led by bulge-bracket investment banks and U.S.-based private-equity firms, are buying record amounts of distressed assets in Japan, working out debt payments and restructurings with thousands of companies.

According to Ernst & Young, so far this year foreign investors have spent $14 billion buying nonperforming Japanese assets, up from $7.3 billion in 2003. "Last year was our biggest year ever in terms of investing in Japan, but right now is the peak," says Chol-Ho Kim, an executive vice-president at GMAC Commercial Mortgage Japan in Tokyo, a branch of U.S. auto manufacturer General Motors Corp., which has invested more than $1 billion in Japan's nonperforming loans. "The market is gushing with deals," says Kim.

So, how does this impact the flow of Japanese investments into the US in the near term. While this issue is not clearly in focus, it could mean more joint ventures and other strategic relationships between US and Japanese companies to strengthen the Japanese companies ability to peform in the US market. That could mean some new deals. It also mean that some Japanese investments in the US now, if they are not adding to the bottom line, will be in jeopardy. The sword could cut both ways.

More here.