Reuters

(Reuters)

GE Takes $1.7B Charge to Settle Japanese Debts

By Industries FOXBusiness

General Electric (GE) said it will record a $1.7 billion charge as it meets refund obligations related to the 2008 sale of its Japanese consumer loan business to Shinsei Bank.

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The conglomerate on Wednesday warned the charge will reduce fourth quarter and full-year 2013 earnings by $1.0 billion and net earnings per diluted share of 9 cents. Operating earnings remain unchanged and the agreement will not impact first-quarter or 2014 results.

In January, GE reported fourth-quarter earnings of $4.2 billion, or 41 cents a share. Adjusted earnings of 53 cents were in-line with expectations.

The $1.7 billion payment will allow GE to reimburse the Japanese bank for refunds of interest paid in excess of the statutory interest rate, known as the “grey zone,” as required through a law passed shortly before the 2008 sale. 

Fairfield, Conn.-based GE sold the business for $5.4 billion six years ago in reaction to the new Japanese law that cut maximum interest rates and required lenders to repay charges on outstanding loans that went above that pre-determined range.

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In their agreement on Wednesday, the two settled on a loss-sharing arrangement with a buyout option in the first quarter of 2014.

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Shares of GE were down 0.44% to $25.16 in recent trade.

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