Leading Japanese distributor Nippon Herald is to be delistedfrom the Japanese stock-market after recently posting an annual loss of $43.4m.

Kadokawa Holdings, the core company of the expandingKadokawa media group, is instead to make Nippon Herald a wholly ownedsubsidiary through a share swap.

Kadokawa has purchased 43 percent of outstanding NipponHerald shares from production subsidiary Kadokawa Pictures.

On July 27 Nippon Herald will be delisted and on August 2,Kadokawa will exchange Nippon Herald shares from remaining shareholders forshares of Kadokawa stock.

Despite distributing the three Lord of the Rings films together with Shochiku, Herald has been bleeding money in the past few years.

With funds supplied by the Kadokawa group, Herald tried torestructure and revive its business, but with little success. The companyrecently announced that its group net loss for the 2004 financial year, endingin March, would be $43.4m, $32.2m more than originally forecast.

Founded in 1956, Herald has long been a leading independentdistributor. In addition the Lord of the Rings trilogy, the company has released Gangs of New York,Alexander and Around the World in80 Days -- the last two box officedisappointments. Its current lineup includes The Aviator, LesChoristes and Blade: Trinity.

A subsidiary, Herald Enterprises, operates eight multiplexesand two arthouse cinemas: Ebisu Garden Cinema and Umeda Garden Cinema.