2009
- May 20, 2009
- NSG
NSG Group – Proposed Issuance of Preferred Shares
The following announcement concerns the proposed issuance by Nippon Sheet Glass Co., Ltd. (the “Company”) of preferred shares through a third-party allotment, together with an increase in other capital surplus following a subsequent reduction in capital and capital surplus, via a transfer to ‘other capital surplus' as well as an amendment to the Articles of Incorporation.
The Company hereby announces that its Board of Directors (the “Board”) at its meeting held earlier today resolved to enter into an investment agreement with UDS Corporate Mezzanine Limited Partnership and UDS Corporate Mezzanine No. 3 Limited Partnership (collectively, the “Allottees”), to issue the Type A Preferred Shares (the “Preferred Shares”) through a third-party allotment to the Allottees, and to reduce capital and capital surplus by the equivalent amount of the increase in capital and capital surplus attributable to the issuance of the Preferred Shares.
The Board also adopted a resolution to submit to its 143rd Annual General Meeting of Shareholders, scheduled to be held on 26 June 2009 (the “Shareholders' Meeting”) a proposal concerning an amendment to the Articles of Incorporation of the Company which enables issuance of the Preferred Shares, of which details are also hereby announced. The issuance of the Preferred Shares is subject to the approval of the Shareholders' Meeting on such amendment to the Articles of Incorporation, and the reduction of capital and capital surplus is subject to the issuance of Preferred Shares.
Summary of Proposed Transaction
The purpose of the proposed transaction is to reduce existing debt, together with an improvement in the equity capital base of the Company. This will reinforce the Company's financial strength and facilitate improved access to debt markets in the near future. The transaction proceeds will be JPY 29.5 billion, of which around JPY 23 billion is to be used for the early repayment of existing borrowings, and the balance for general corporate purposes. The Board believes that the issuance of Preferred Shares is the most appropriate method of providing flexible and stable reinforcement of the Company's current equity capital requirements. The proposed date of issue is 1 July, 2009. The transaction is subject to shareholders' approval on the related amendment to the Articles of Incorporation, which will be sought at the Company's Shareholders' Meeting on 26 June, 2009.
The Allottees are UDS Corporate Mezzanine Limited Partnership and UDS Corporate Mezzanine No. 3 Limited Partnership, established by the Development Bank of Japan Inc., Sumitomo Mitsui Banking Corporation (SMBC) and Sumitomo Mitsui Finance & Leasing Co., Ltd. (among which Sumitomo Mitsui Finance & Leasing Co., Ltd. is investing only in UDS Corporate Mezzanine No. 3 Limited Partnership)
Ⅰ. Issuance of Preferred Shares through aThird-Party Allotment
1. Purpose of issuance of shares through a third-party allotment
(1) Major purpose of raising capital
During the second half of the Company's financial year ended 31 March, 2009, the world economy experienced a sharp downturn. The Company's businesses have been operating in an increasingly difficult trading environment, with markets for the Company's products severely affected by global recession.
As announced on 29 January, 2009 and 7 April, 2009, the Company is in the process of implementing restructuring initiatives designed to address the economic downturn and to improve profitability going forward. The overall objective of these initiatives is to protect and maintain the business in the short term and to re-establish profit growth from the fiscal year ending 31 March, 2011 onwards.
The restructuring initiatives include 1) reducing capacity and output to match the demand of the Company's customers, 2) reducing headcount, and 3) reducing overall investment. Good progress has been made against each of these objectives.
Against this background, the issuance of the Preferred Shares resolved today is designed primarily to apply to repayment of borrowings and also to maintain and improve funding flexibility, underpinning further anticipated debt funding by reinforcing the Company's financial strength with an increase in equity capital, which is deemed essential for the Company's stable and long term growth.
(2) Reason for raising capital through Preferred Shares
In light of the recent financial market conditions and the trading environment in the markets in which the Company operates, the Company considered various funding options to generate an improvement in its capital base. After careful consideration, for the reasons outlined below, the Company has chosen issuance of Preferred Shares, enabling flexible and stable reinforcement of the Company's equity capital and a reduction in the Company's interest-bearing debt.
- The scheme will increase the Company's equity capital and raise its capital ratio.
- The issuance of the Preferred Shares is an effective measure to enable the Company to repay borrowings.
- The Preferred Shares to be issued are preferred shares structured in such a way as to limit the dilution of common shares as described below, thereby limiting the dilution effect for the Company's common shareholders:
- Restriction on the acquisition of Preferred Shares with a consideration of common shares. The investment agreement with the Allottees (the “Investment Agreement”) provides that the rights to request acquisition of the Preferred Shares by the Company with a consideration of common shares (the “Right to Request Acquisition with Common Share Consideration”) may be exercised only in the event that the Allottees are not able to exercise the right to request acquisition of Preferred Shares by the Company with a consideration of cash (the “Right to Request Acquisition with Cash Consideration”).
- Restriction on the request of acquisition of Preferred Shares with a consideration of cash. During the first seven years from the date of issuance of the Preferred Shares, the Right to Request Acquisition with Cash Consideration may only be exercised in the event that the Company does not fulfill certain obligations contained in the Investment Agreement, including the financial covenants.
- The right to acquire Preferred Shares by the Company. The Company has the right to acquire all or a part of the Preferred Shares on or after the date of issuance of the Preferred Shares at the Company's option in a flexible manner after completing certain procedures.
- Considering the current financial market environment, the Company determined that the Preferred Shares have reasonable dividend conditions commensurate with preferred shares containing restrictions on exchange into common shares.
(3) Dilution of common shares due to the issuance of the Preferred Shares
The Preferred Shares contain a provision to grant the Allottees the Right to Request Acquisition with Common Share Consideration. Therefore, if such rights are exercised and new common shares of the Company are delivered, dilution of the Company's common shares may occur to a certain extent. However, in order to limit an increase of common shares by the exercise of such Rights as far as possible, the following measures are implemented.
(a) Restrictions on exercise of the Right to Request Acquisition with Common Share Consideration
Although the Allottees are granted the Right to Request Acquisition with Common Share Consideration, it is provided in the Investment Agreement that the Right to Request Acquisition with Cash Consideration shall be exercised first and that the Allottees may exercise the Right to Request Acquisition with Common Share Consideration only after any of the below mentioned events occurs and during such event is existing. The exercise period of such rights is on and after 2 July, 2009; provided, however, that under the Investment Agreement, with respect to (1) below, even after the relevant event occurs, the Allottees may not exercise the Right to Request Acquisition with Common Share Consideration, if the Company recovers a sufficient amount of distributable reserves so that the Company is able to acquire all the Preferred Shares held by the Allottees at the relevant time with cash consideration, and the Company gives notice in writing to that effect together with the materials that are reasonably satisfactory to the Allottees.
| (1) | When the Company does not acquire any part of the Preferred Shares, after an exercise of the Right to Request Acquisition with Cash Consideration by an Allottee in accordance with the provisions of the Investment Agreement, on the grounds that the relevant cash consideration exceeds the distributable reserves of the Company as of the date of Request of Acquisition with Cash Consideration or for any other reason, the Right to Request Acquisition with Common Share Consideration may be exercised by the Allottees for the number of the Preferred Shares held by the relevant Allottee but excluding the number of the Preferred Shares already acquired by the Company under the Request of Acquisition with Cash Consideration. |
|---|---|
| (2) | When any of the Acquisition Request Events (as listed in(4)below) occurs and when the amount calculated by multiplying the total number of Preferred Shares held by the Allottees by the Base Acquisition Price prescribed in Condition 14 of the terms and conditions of the Preferred Shares (the “Terms and Conditions”), at the time of occurrence of such event exceeds the distributable reserves of the Company, the Right to Request Acquisition with Common Share Consideration may be exercised by the Allottees for the number of the Preferred Shares held by the Allottees but excluding the number of the Preferred Shares which is produced by dividing the distributable reserves effective under the Companies Act as of the date of the request of acquisition of Preferred Shares, by the Base Acquisition Price under Condition 14 of the Terms and Conditions calculated as of the date of such request as if such date is an acquisition date (disregarding the fraction less than one share). The number of such exercisable Preferred Shares is determined rateably between the Allottees in accordance with the number of the Preferred Shares held or otherwise determined by the Allottees and shall be notified in writing to the Company. |
Thus, the common shares of the Company may only be delivered to the Allottees when the Company is not able to acquire Preferred Shares at a Request of Acquisition with Cash Consideration by the Allottees.
(b) Restriction on the revision of the Initial Exchange Price and setting the floor for revisions
The exchange price (the “Exchange Price”), which is the consideration per share of the common shares to be delivered to the Allottees if the Right to Request Acquisition with Common Share Consideration is exercised, is initially JPY 291.7 (the “Initial Exchange Price”). The Exchange Price shall be revised on 15 January and 15 July (the “Exchange Price Revision Date”) each year to 90 percent of the Current Market Price, provided, however, that the Exchange Price shall not be reduced below 65 percent of the Initial Exchange Price (the “Minimum Exchange Price”). Current Market Price on any Exchange Price Revision Date means the average of the daily closing prices (including any closing bid and offered prices) of the common shares of the Company for 30 consecutive trading days commencing 45 trading days before such date (excluding any number of dates where no closing price was obtained) rounded downward to the nearest one tenth yen.
If the Right to Request Acquisition with Common Share Consideration is exercised at the Initial Exchange Price for all the Preferred Shares held by the Allottees, 102,845,389 shares of Common Shares (which is equivalent to 15.36 percent (the third decimal place is rounded to the nearest second decimal place)) of the total number of the issued shares of common shares of the Company as at the date immediately prior to the date of issuance of the Preferred Shares. If the Right to Request Acquisition with Common Share Consideration is exercised at the Minimum Exchange Price for all the Preferred Shares held by the Allottees, 158,223,675 shares of Common Shares (which is equivalent to 23.63 percent (the third decimal place is rounded to the nearest second decimal place)) of the total number of the issued shares of common shares of the Company as at the date immediately prior to the date of issuance of the Preferred Shares.
Thus, the Preferred Shares do not fall under the category of so called “moving strike convertible bonds (MSCB)” or any similar securities thereto set out in the rules of the Tokyo Stock Exchange. Also the minimum price after revision of the Exchange Price is restricted to 65 percent of the Initial Exchange Price.
(c) The Company's right to acquire Preferred Shares with a consideration of cash (the “Right of Acquisition with Cash Consideration”)
The Company may acquire all or part of the Preferred Shares on the date the Board of Directors of the Company determines, to the extent the applicable laws and regulations permit, with a consideration of cash payment irrespective of the intention of the Allottees (Condition 15 of the Terms and Conditions). Thus, the Company may at its option acquire and cancel the Preferred Shares. In such case, the acquisition price per Preferred Share will be (a) if the date of acquisition based on the Right of Acquisition with Cash Consideration falls within the period from the date of issuance to the day immediately before its first anniversary, the amount equal to the Base Acquisition Price set out in Condition 14 multiplied by 1.02, or (b) if the date of acquisition by Right of Acquisition with Cash Consideration falls in any subsequent day, the amount equal to the Base Acquisition Price set out in Condition 14 in accordance with the provisions of Condition 15 of the Terms and Conditions.
(d) Voting Rights
No voting rights are granted to the Preferred Shares except in the case required by the laws and regulations. Thus, the Preferred Shares are designed to restrict dilution of the voting rights of the holders of common shares of the Company.
(4) Right to Request Acquisition of Preferred Shares by the Company with Cash Consideration
Under the Investment Agreement, the Right of Request Acquisition with Cash Consideration may only be exercised when any of the events (the “Acquisition Request Events”) mentioned below occurs.
- Seven years from the date of issuance of the Preferred Shares have passed;
- Any of the obligations of the Company under the Investment Agreement (as described in(5)below) (the “Obligations of the Company”) is not fulfilled (except in the case that the non-fulfillment is not material and that, if such non-fulfillment is relating to the obligation for disclosure of information, only when the obligation of the Company is not fulfilled for 10 business days after the receipt of a notice in writing from Allottees to the effect that such obligation has not been fulfilled );
- The Company contravenes any of its representation and warranties set out in the Investment Agreement (such as due preparation of the annual securities report, no contingent liability after the record date, no material subsequent event, no violation of material contract, no material legal proceedings, and others which are common representations and warranties in issuance of shares through allotment to third parties) by willful misconduct or negligence (except for any immaterial contravention);
- The amount of total shareholders' equity as shown in the non-consolidated balance sheet as of the end of the most recent quarter is less than JPY 245 billion, provided, however, that it is not applicable if (1) the Company submits a document describing any specific measures to increase the amount of total shareholders' equity that satisfies the Allottees within 45 days after the relevant end of the quarter, and (2) within 60 days from such submission of a document, (i) non-consolidated total shareholders' equity of the Company amounted to JPY 245 billion or more, or (ii) the Company notifies to the Allottees in writing together with the support materials (including, but not limited to, the results or development of the specific measures mentioned in (1) above) that satisfies the Allottees that non-consolidated total shareholder's equity of the Company is expected to be JPY 245 billion or more;
- Each of the amounts of total shareholders' equity of the Company as shown in the consolidated balance sheet as at the end of each fiscal year or the end of the second quarter is less than 75 percent of the higher of total shareholders' equity appeared in the consolidated balance sheet as at 31 March, 2009 or total shareholders' equity appearing in consolidated balance sheet as at the end of the most recent fiscal year , provided, however, that the Allottees may not exercise the Right of Request Acquisition with Cash Consideration until any notice notifying that the obligation under the Senior Loan Agreement defined in the Investment Agreement becomes due and payable is given to the Company;
- Consolidated operating results as shown in the consolidated profit and loss statement of the Company are in deficit for two consecutive fiscal years, provided, however, that the Allottees may not exercise the Right of Request Acquisition with Cash Consideration until any notice notifying that the obligation under the Senior Loan Agreement defined in the Investment Agreement becomes due and payable is given to the Company; or
- Any group of specific shareholders (including joint holders of the shares of the Company, persons to purchase shares of the Company and related parties) holds more than 1/3 of the total number of issued shares of the Company, however, it is not applicable when such group of specific shareholders purchased the shares of the Company on the stock market of any of the stock exchanges.
(5) Agreement with Allottees under the Investment Agreement
The Company agrees with the Allottees the following matters to secure the funds to cope with the Request of Acquisition with Cash Consideration.
(a) The Company's obligation relating to the Right of Request Acquisition with Cash Consideration
| (ⅰ) | The Company will make reasonable efforts to maintain its distributable reserves to the extent possible under the relevant laws and regulations, and as a listed company. |
|---|---|
| (ⅱ) | The Company will make reasonable and any possible efforts to secure its distributable reserves to the extent possible under the relevant laws and regulations, and as a listed company, when the amount calculated by multiplying the total number of the Preferred Shares held by the Allottees by the Base Acquisition Price prescribed in Condition 14 of the Terms and Conditions at the relevant time exceeds the distributable reserves of the Company. |
| (ⅲ) | The Company will consult with the Allottees with respect to the possible measures under applicable laws and regulations and as a listed company when it makes any action relating to the above. |
(b) Covenants of the Company to the Allottees
The Company's covenants include the following matters:
| (ⅰ) | it will submit the required information, and notify any event which has a material adverse effect on the business operations, management and financial conditions of the NSG Group and any other material event; and |
|---|---|
| (ⅱ) | it will continue its core businesses of the NSG Group (i.e. sheet glass manufacturing business), maintain and not change without the consent of the Allottees (however, such consent will not unreasonably be withheld) the capital investment ratio of the Company in NSG Holding (Europe) Limited and NSG UK Enterprises Limited and not implement material restructuring except for that within the NSG Group, not make capital decrease, merger and transfer of business, acquisition of its own shares or amendments to the loan agreement defined under the Investment Agreement. |
2. Amount of Proceeds and Use of Proceeds
(1) Amount of funds to be raised (estimated proceeds after deduction of costs)
| Aggregate amount to be raised | JPY 30,000,000,000 |
|---|---|
| Estimated amount of costs and expenses for issuance | JPY 450,000,000 |
| Estimated proceeds after deduction of costs | JPY 29,550,000,000 |
(2) Details of use of proceeds
Within the proceeds of the issuance, JPY 23 billion will be applied to repayment of the borrowings of the Company which will become due within the fiscal year ending 31 March, 2010 and the balance will be utilized for general corporate purposes.
(3) Scheduled time for expenditure of proceeds
The proceeds of the issuance are scheduled to be utilized in July 2009 and thereafter. The amount of estimated proceeds after deduction of costs mentioned above will be kept and managed in the Company's bank account until such proceeds are applied for the above.
(4) Rationale for use of proceeds
The Company aims to maintain and improve its funding flexibility, continuing its stable business relationships with the financial institutions and enhancing its cash position with the increased equity capital and the strengthened financial base by the issuance of the Preferred Shares, towards the goal of realizing the stable and long-term growth of the Company's businesses.
The Company believes that the issuance of the Preferred Shares will contribute to further increasing its corporate value, and has determined that the use of proceeds mentioned above is reasonable.
3. Business Results and Equity Finance for Past three Years
(1) Consolidated business results for past three years
| Fiscal year | FY 2007 | FY 2008 | FY 2009 |
|---|---|---|---|
| Sales | 681,547 | 865,587 | 739,365 |
| Operating income | 23,822 | 46,462 | 1,908 |
| Ordinary income | 8,001 | 30,437 | -12,259 |
| Net income | 12,095 | 50,416 | -28,392 |
| Net income per share (JPY) | 21.85 | 75.44 | -42.49 |
| Dividends per share (JPY) | 6.00 | 6.00 | 6.00 |
| Book-value per share (JPY) | 504.55 | 536.37 | 369.15 |
(2) Number of outstanding shares and dilutive shares at present (as of 31 March 2009)
| Type | Number of shares | Ratio to the number of issued shares |
|---|---|---|
| Number of issued common shares | 669,550,999 shares | 100% |
| Potential number of common shares to be issued at the Initial Exchange Price | 44,472,424 shares | 6.64% |
Note: Ratio to the number of issued shares is calculated to the third decimal place and rounded to the nearest second decimal place.
(3) Recent share prices
1. For the past three years
| FY2007 | FY 2008 | FY 2009 | |
|---|---|---|---|
| Opening | 646 | 620 | 445 |
| High | 773 | 718 | 597 |
| Low | 501 | 408 | 183 |
| Closing | 618 | 441 | 242 |
2. For the past six months
| December 2008 | January 2009 | February 2009 | March 2009 | April 2009 | May 2009 | |
|---|---|---|---|---|---|---|
| Opening | 281 | 299 | 229 | 192 | 246 | 274 |
| High | 333 | 340 | 246 | 282 | 311 | 321 |
| Low | 252 | 218 | 192 | 183 | 244 | 272 |
| Closing | 291 | 224 | 197 | 242 | 277 | 295 |
Note: The share prices for May 2009 listed above are the prices as of 19 May, 2009.
3. Share price as of the day preceding the date of the resolution authorizing the issuance
| As of 19 May 2009 | |
|---|---|
| Opening | 297 |
| High | 303 |
| Low | 293 |
| Closing | 295 |
(4) Equity finance under this transaction
| Issue Date | 1 July, 2009 |
|---|---|
| Amount of Proceeds | JPY 29,550,000,000 (issue price: JPY 30,000,000,000) (estimated proceeds after deduction of costs) |
| Number of issued shares at the time of the issuance | 669,550,999 shares |
| Number of shares to be issued through this capital increase | Type A Preferred Shares 3,000,000 shares |
| Aggregate number of issued shares after the issuance | Common shares: 669,550,999 shares Type A Preferred Shares: 3,000,000 shares |
| Allottees | UDS Corporate Mezzanine Limited Partnership UDS Corporate Mezzanine No.3 Limited Partnership |
(5) Equity Finance for Past Three Years
Not Applicable.
4. Major Shareholders and their Shareholding Ratio
(1) Common Stock
| Before the offering (as of 31 March, 2009) | After the offering | |
|---|---|---|
| Japan Trustee Services Bank, Ltd.(trust account) | 8.94% | Same as the left column. |
| Japan Trustee Services Bank, Ltd. (trust account 4) | 7.67% | |
| The Master Trust Bank of Japan, Ltd.(trust account) | 7.47% | |
| Japan Trustee Services Bank, Ltd.(trust account 4) | 3.21% | |
| Toyota Motor Corporation | 1.44% | |
| Sumitomo Life Insurance Company | 1.37% | |
| Japan Trustee Services Bank, Ltd.(Retirement Benefit Account, Sumitomo Trust and banking) | 1.31% | |
| State Street Bank and Trust Company 505225 | 1.23% | |
| The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account | 1.16% | |
| Mellon Bank, N.A. as agent for its client Mellon Omnibus US Pension | 1.08% | |
(2) Type A Preferred Shares
| Before the offering (as of 20 May 2009) | After the offering | |
|---|---|---|
| Not Applicable | UDS Corporate Mezzanine Limited Partnership | 15.00% |
| UDS Corporate Mezzanine No.3 Limited Partnership | 85.00% | |
5. Expected Impact on Business Results
The Company believes that this issuance of the Preferred Shares will strengthen the financial base of the Company on both consolidated and non-consolidated bases. The impact of this issuance on the operating business results is expected to be negligible, and thus earnings projections for the current fiscal year remain unchanged.
6. Reasonableness of Conditions of Issuance, etc.
(1) Basis for calculating the offer price
Taking into account various factors including the dividend rate of the Preferred Shares (9.25 percent)* and the credit cost undertaken by the holders of Preferred Shares, the Company comprehensively considered factors such as its business environment, financial situation and liquidity of the Preferred Shares, in determining the terms and conditions of the issuance of the Preferred Shares (including those of the Investment Agreement). The Company has determined that the terms and conditions of the Preferred Shares (including those of the Investment Agreement) are fundamentally at a level which is deemed reasonable and the issuance of the Preferred Shares is currently the best option available to raise capital. In order to ensure the fairness of the valuation, the Company has obtained a valuation letter from KPMG Tax Corporation in which a multiple layer trinomial tree model is utilized.
The Initial Exchange Price is JPY 291.7 (the volume-weighted average price (VWAP) for the 5 business days prior to the date of the decision to issue the Preferred Shares). The Exchange Price will be revised every year on 15 January and 15 July (the “Reset Date”) at 90 percent of the market price (calculated using the average of the closing prices of the common shares of the Company (including displayed quotes) on the Tokyo Stock Exchange for each of the 30 trading days commencing 45 trading days prior to the Reset Date (excluding days where no trading occurs), the result of which shall be calculated to the second decimal place, which is then truncated to one decimal place); however, there is a lower limit to the Exchange Price which is set at 65 percent of the Initial Exchange Price.
* For the details of the Preferred Shares including the dividend rate, please refer to the attached Terms and Conditions of the Preferred Shares.
(2) Rationale for judgment that number of shares to be issued and level of dilution of shares are reasonable
The Preferred Shares include a Right to Request Acquisition with Common Share Consideration and if such Right is exercised at the Initial Exchange Price for all the Preferred Shares held by the Allottees, 102,845,389 shares of Common Shares (which is equivalent to 15.36 percent (the third decimal place is rounded to the nearest second decimal place)) of the total number of the issued shares of common shares of the Company as at the date immediately prior to the date of issuance of the Preferred Shares.
If the Right to Request Acquisition with Common Share Consideration is exercised at the Minimum Exchange Price for all the Preferred Shares held by the Allottees, 158,223,675 shares of Common Shares (which is equivalent to 23.63 percent (the third decimal place is rounded to the nearest second decimal place)) of the total number of the issued shares of common shares of the Company as at the date immediately prior to the date of issuance of the Preferred Shares.
As described above, dilution of common shares may occur when the Preferred Shares are acquired by the Company in exchange for common shares. However, as:
- In light of the current business and financial environment of the Company, the Company believes it necessary to ensure stable business operations by strengthening its financial base, and has determined that further enhancement of its corporate value will be possible by improving its financial status through the issuance of the Preferred Shares;
- As set forth in I. 1. (3) above, in order to prevent, to the extent possible, potential increases of the Company's common shares, the Company has limited the situations where common shares would be issued to the holders of the Preferred Shares to cases where the Company is unable to effect an acquisition of the Preferred Shares with Cash Consideration,, the Exchange Price is reset once every 6 months and is subject to an appropriate lower limit, at the option of the Company the Preferred Shares can be acquired and cancelled using the distributable reserves available which results in those Preferred Shares not being exchanged into common shares, and the Preferred Shares will not have voting rights except for those cases defined under the relevant laws, which results in a structure which limits to a defined extent the potential dilution of the common shares.
The Company believes that this issuance of Preferred Shares will be seen as reasonable by the holders of common shares of the Company.
7. Reason for Selecting Allottees
(1) Outline of the Allottees
| 1. Name | UDS Corporate Mezzanine Limited Partnership | |||
|---|---|---|---|---|
| 2. Number of Preferred Shares to be allotted | 450,000 shares | |||
| 3. Amount to be paid | JPY 4,500,000,000 | |||
| 4. Rationale for the establishment, etc. | Limited Partnership in accordance with the Limited Partnership Act for Investment | |||
| 5. Address | 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo | |||
| 6. General Partner (Unlimited liability partner) |
Yugen Kaisha DBJ Corporate Mezzanine Partners (Chiyoda-ku, Tokyo)* * A consolidated subsidiary of Development Bank of Japan Inc., of which main business is operating and managing mezzanine funds. Development Bank of Japan Inc. (Chiyoda-ku, Tokyo) |
|||
| 7. Aggregate amount of investment | JPY 30 billion | |||
| 8. Relationship between the Company and the allottee | Capital relationship (including directors, officers and major shareholders) between the Company and the Allottees | None | ||
| Relationship between the Company and the General | Yugen Kaisha DBJ Corporate | Capital Relationship | None | |
| Partner | Mezzanine Partners | Transaction Relationship | None | |
| Personal Relationship | None | |||
| Development Bank of Japan Inc. | Capital Relationship | None | ||
| Transaction Relationship | Banking Transactions | |||
| Personal Relationship | None | |||
| 1. Name | UDS Corporate Mezzanine No.3 Limited Partnership | |||
|---|---|---|---|---|
| 2. Number of Preferred Shares to be allotted | 2,550,000 shares | |||
| 3. Amount to be paid | JPY 25,500,000,000 | |||
| 4. Rationale for the establishment, etc. | Limited Partnership in accordance with the Limited Partnership Act for Investment | |||
| 5. Address | 9-1, Otemachi 1-chome, Chiyoda-ku, Tokyo | |||
| 6. General Partner (Unlimited liability partner) |
Yugen Kaisha DBJ Corporate Mezzanine Partners (Chiyoda-ku, Tokyo)* * A consolidated subsidiary of Development Bank of Japan Inc., of which main business is operating and managing mezzanine funds. Development Bank of Japan Inc. (Chiyoda-ku, Tokyo) |
|||
| 7. Aggregate amount of investment | JPY 100 billion | |||
| 8. Relationship between the Company and the allottee | Capital relationship (including directors, officers and major shareholders) between the Company and the Allottees | None | ||
| Relationship between the Company and the General Partner | Yugen Kaisha DBJ Corporate Mezzanine Partners | Capital Relationship | None | |
| Transaction Relationship | None | |||
| Personal Relationship | None | |||
| Development Bank of Japan Inc. | Capital Relationship | None | ||
| Transaction Relationship | Banking Transactions | |||
| Personal Relationship | None | |||
(2) Reason for selecting allocated parties
Given the current status of the market for preferred shares, and from the perspective of ensuring the ability to raise the intended amount of equity capital, the Company has selected UDS Corporate Mezzanine Limited Partnership and UDS Corporate Mezzanine No.3 Limited Partners, which were established by Development Bank of Japan Inc., Sumitomo Mitsui Banking Corporation (SMBC), and Sumitomo Mitsui Finance & Leasing Co., Ltd., (among which Sumitomo Mitsui Finance & Leasing Co., Ltd. is investing only in UDS Corporate Mezzanine No. 3 Limited Partnership) as Allottees for the Preferred Shares as the Company believes these Allottees understand it's financial situation and think highly of the business activities and the future prospects of the NSG Group.
(3) Holding policy of the allocated parties
In principle, the allottees intend to hold the Preferred Shares as a medium-term investment. After purchase of the Series A Preferred Shares, the Allottees, to the extent possible, will take into account such factors as market conditions and the Company's situation, in holdings of the Shares, and request of acquisition by the Company of the Preferred Shares with Common Share Consideration, and if common shares are issued, will seek to dispose of the common shares through methods such as sales.
The Allottees may transfer the Preferred Shares by a prior written notice at least 7 business days prior to the date of transfer to the Company with respect to the outline of the transfer (including, but not limited to, the name and outline of the business of the expected transferee, and the number of the Preferred Shares scheduled to be transferred); provided, however, that the Allottees are not able to transfer the Preferred Shares to a person competing with the Company who primarily engages in sheet glass manufacturing business, or any person related to anti-social forces. In addition, the Company plans to obtain confirmation from the Allottees to the effect that the Allottees will report to the Company if they transfer the Preferred Shares or the common shares of the Company to be exchanged for the acquisition of the Preferred Shares.
8. Schedule of Issuance
| 20 May, 2009: | Board approval |
|---|---|
| 26 June, 2009: | Annual General Meeting of Shareholders (scheduled) |
| 1 July, 2009: | Date of Application for Preferred Shares (scheduled) |
| 1 July, 2009: | Date of Payment(scheduled) |
Ⅱ. Increase in “other capital surplus” (immediately following reduction in capital and capital surplus simultaneous with the issuance of new shares)
1. Purpose of capital and capital surplus reductions simultaneous with the issuance of new shares
With reduction of capital and capital surplus conditional on the issuance of the Preferred Shares, the Company aims to implement capital policies in a more flexible and timely manner by transferring the proceeds from the issuance of the Preferred Shares to “other capital surplus”, which is a part of distributable reserves.
2. Procedures of capital and capital surplus reductions simultaneous with the issuance of new shares
(1) Amount of capital to be reduced
JPY 15 billion
(As the amount will simultaneously be increased through the issuance of the Preferred Shares, the amount of capital after the effective date will not be less than that before the effective date.)
(2) Amount of capital surplus to be reduced
JPY 15 billion
(As the amount will simultaneously be increased through the issuance of the Preferred Shares, the amount of capital surplus after the effective date will not be less than that before the effective date.)
(3) Method of capital and capital surplus reduction
Method in accordance with the provisions of Article 447, Paragraph 3 and Article 448, Paragraph 3 of the Companies Act
(Reduction of capital and capital surplus simultaneous with an issuance of new shares)
3. Schedule of issuance of new shares, reduction of capital and capital surplus
| 20 May, 2009: | The Board approval |
|---|---|
| 29 May, 2009: | Legal public notice (scheduled) |
| 30 June, 2009: | Deadline for creditors to submit dissents (scheduled) |
| 1 July, 2009: | Effective date (scheduled) |
4. Future projections
Reduction of capital and capital surplus occurs due to the transfer of the capital and capital surplus in the net assets to other capital surplus, and thus the total net assets of the Company will remain unchanged and there will be no adverse effect on the business results of the Company. Also this transfer is to be made within the proceeds from the issuance of the Preferred Shares, and thus the amount of capital and capital surplus after the effective date will not be less than that before the effective date.
Ⅲ. Amendment of the Articles of Incorporation
1. Reasons for Amendments
The Board resolved at its meeting held today that the Company shall submit a proposal regarding partial amendment to the Articles of Incorporation at the General Meeting of Shareholders, with the intention of
- creating new articles regarding the Type A Preferred Shares to enable issuance of the Preferred Shares, and
- deleting the provisions relating to certificates of shares, beneficial shareholders and list of beneficial shareholders in accordance with the enforcement of the Law amending a part of the Law concerning Transfer of Bonds and Other Securities for the purpose of rationalization of clearing of stocks and other securities (Law No. 88 of 2004) and
- making other necessary additions and changes to the provisions.
2. Content of Amendments
The contents of the amendments are shown in the Appendix 2.
3. Schedule
| 20 May, 2009: | Board approval |
|---|---|
| 26 June, 2009: | Annual General Meeting of Shareholders (scheduled) Effective date of the amendment to the Articles of Incorporation (scheduled) |
(Appendix 1)
The contents of the amendment is shown in the Appendix.
Appendix: Terms and conditions of the Type A Preferred Shares (65KB/9Pages)
(Appendix 2)
The contents of the amendment is shown in the Appendix.
Appendix: Contents of Partial Amendment to the Articles of Incorporation (77KB/21Pages)
