Cerberus challenges Seibu management ahead of annual meeting

In a 22-page open letter, Cerberus, Seibu's biggest shareholder, criticized the handling of the business. This is the latest development in an ongoing row between the two. 

The letter, addressing Seibu President Takashi Goto, lambasts the company for failing to hit earnings targets and for its governance and disclosure practices. The firm also asked Goto to explain how the current board was being supervised and being held accountable for its performance.

"Please explain in a specific way so that shareholders, who have lost opportunities to trade shares over eight years since delisting, can be convinced," the letter reads. Cerberus has also demanded that the shareholders' meeting, scheduled for June 25, be open to the public via streaming video. Seibu officials said they would answer the questions from Cerberus at the annual meeting.

Relations between the two parties turned sour in 2011 following disagreements over the timing and pricing of company's planned IPO.

The New York-headquartered private equity fund raised its stake in Seibu by to 35.48% earlier this month following an unsolicited public tender. The tender offer had been sparked by moves from Seibu to severe formal ties with the firm. Cerberus later extended the tender in a bid to gain as much as 44.7% but fell short of its target.

Cerberus initially paid $802 million for a 29.9% stake in the company in 2006, participating in a $1.2 billion bailout alongside Nikko Principal Investments. Seibu was delisted from the Tokyo Stock Exchange in 2004 amid a scandal over misstating stakes held by shareholders in contravention of exchange rules.

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