Center for Labor Education & Research, University of Hawaii - West Oahu: Honolulu Record Digitization Project

Honolulu Record, Volume 10 No. 23, Thursday, January 2, 1958 p. 1

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Japanese Money in Fight for Downtown Property

House of Mitsukoshi Bldg. Nearly Controlled by National Mortgage Firm

An aggressive move for the control of the strategically located "House of Mitsukoshi" land and building — quietly underway for some time in the Japanese community—was to be climaxed Monday night, Dec. 30, at the board of directors' meeting of National Mortgage and Finance Co., Ltd. Its value is estimated between $600,000 and $1,000,000
A dominant group among the board of directors of International Enterprises, Ltd., owners, of the building on the ewa, mauka corner of King and Bethel Sts., want National Mortgage to absorb the corporation which has not paid dividends for 17 years and is $200,000 in debt, which must be paid in 10 years.

Minority Opposes

This group has been contacting International Enterprises shareholders in the effort to give National Mortgage 85 per cent, control of the assets of the corporation.

A minority of big shareholders of International Enterprises has opposed the move, preferring a merger with any going concern, or opening the proposition of, a sale or merger to any legitimate party, to get the best deal for International stockholders.

A dominant element has argued that National Mortgage is a Japanese concern and International Enterprises, which is owned by people of Japanese ancestry, should limit the negotiations to National Mortgage. The RECORD was told by a "source that this "racial clannishness" is a sentiment held by a powerful few, and probably the "race" argument was used as a lever to swing the deal to National.

Another party besides National Mortgage expressed interest in buying the International Enterprises but its offer was not considered because "the party was not Japanese."
One party is reported to have offered $750,000.

The dominant group of International Enterprises has argued that National Mortgage wants to help the former. To this the minority opposition has argued—when has National Mortgage helped International? If National, Mortgage wants to help, there are many forms of assistance it could resort to instead of trying to absorb International Enterprises without any cash outlay.

Deal with Japan

International Enterprises was capitalized for $340,000 in the late 1930's, and now its property is worth $600,000 to $1,000,000. Prior to 1941, it bought the land on the corner of Bethel and King 'Sts., and put up the building for a department store. The name, "House of Mitsukoshi," was used because the firm in Japan agreed to send merchandise on consignment to help the new corporation. The legal name was always International Enterprises, Ltd.

House of Mitsukoshi in Japan sent merchandise to Honolulu that would not sell locally and the local firm asked the Japanese business house to take it back (or give a discount. Before Pearl Harbor, according to reports, it agreed verbally to write off the account.
After Pearl Harbor the U.S. Alfen Property Custodian attached International Enterprises assets for the amount it owed Mitsukoshi in Japan. The debt was paid and the title of the property was cleared.

The building is being rented out to tenants, including Aloha Airlines and the Veterans Administration.

Masayuki Tokioka head of National Mortgage, emphatically told the RECORD that "National Mortgage never made an offer" to International Enterprises.

He said International Enterprises approached his firm. However, he said, there has been some "misunderstanding" because an officer of International Enterprises is on the staff of National Mortgage. ,

Asking 85 per cent

'"We are asking them to give us 85 per cent control," he said.

The deadline of the offer is Dec. 31. At the National Mortgage directors' meeting Dec. 30, the directors were to decide what method they would adopt to control International Enterprises assets. All concede that the pro-National Mortgage group among International Enterprises stockholders have about 75 per cent of the shares sewed up.
National Mortgage is offering holders a partial exchange of stock with National Mortgage shares. National Mortgage offers 25 per cent of the exchange value in preferred stock and 75 per cent in debenture bond, which will collect 6 per cent interest.
 
After 10 years, 50 per cent of the present value of the debenture bond will be paid in cash and the other half in common stock of National Mortgage Meantime, National Mortgage assumes the $200,-000 obligation of International Enterprises.

Needs Building

"This is a windfall for National Mortgage which needs a building very, very badly," a source said.

Tokioka says no cash payment is offered because of the $200,000 obligation his firm must pay, if it takes control He had the property appraised and the value was fixed at $600 000 Because it was built for department store, renovation for office use will cost $225,000, he said.

He says he wants 85 per cent control He questions whether 75 per cent is a "safe margin"
"We can't ignore the goodwill of Mitsukoshi stockholders. There are 700 of them," he said.

Economic Factors

He explained that "race," or "Japanese" consideration should not be the deciding factor Economic factors must be weighed in the interest of stockholders of International Enterprises, he said.

He said his firm "did not buy shares in the House of Mitsukoshi because operation of a department store is difficult" It was premature to start one then, without the know-how of the initiators He claims his position has been sustained by events.

Furthermore, he was unable to invest in the "House of Mitsukoshi" because during the same year Island Insurance Co was started and it needed capital outlay.

It is only common humanity to feed the hungry. If our hospitals are too big, too complex, too impersonal to do these small kindnesses for the sick, something is very wrong.