Apr. 22--TOKYO -- The House of Councillors passed a revision bill in a plenary session Wednesday morning to establish a system enabling struggling private companies to use public funds to recapitalize.

The revised Industrial Revitalization Law is expected to come into force later this month.

The system is aimed at companies that have posted poor results since the onset of the financial crisis last year.

The Development Bank of Japan and other government-designated financial institutions will contribute funds to companies eligible for coverage under the law, and the government will make up between 50 percent and 80 percent of potential losses should these companies fail.

Eligible companies, many of them in the electronics industry, are now likely to start preparing applications for such public funding.

Firms in the electronics industry have positively embraced full-blown business reconstruction.

Companies including Hitachi, Ltd., NEC Corp., and Elpida Memory, Inc., the world's No. 3 dynamic random access memory (DRAM) maker, are considering applying for the capital-boosting program.

Toshiba Corp., which is planning a ¥500 billion recapitalization, also is expected to apply for public funds.

Another possible applicant could be a potential tie-up firm formed by major semiconductor maker Renesas Technology Corp. and NEC Electronics Corp., a semiconductor subsidiary of NEC.

Renesas Technology was founded through a joint venture between Hitachi and Mitsubishi Electric Corp.

Elpida is discussing a capital tie-up and business alliance with Taiwan chip maker Taiwan Memory Corp., and also plans to submit an application.

Toshiba, which is projected to post a sizable post-tax loss in its fiscal 2008 consolidated accounts, is expected to make adjustments to receive funds from the system as part of its recapitalization plans.

Meanwhile, slumping car sales have led several automakers also to consider applying for funds under the system.

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